Feds - have you applied for Long Term Care insurance?

[Anonymous]

DH and I are both Feds in our early 40s. To round out our retirement portfolio, we're wondering if we should invest in some long term care and/or long term disability insurance. We feel that the disability insurance might be more important in the short term, but fed employees are offered the LTC insurance. So, we're wondering if we should do LTC through the fed program and buy a supplemental long term disability policy. Would be a lot more money than we want to spend. Any good advice or been there stories you all can share regarding this issue?

[Anonymous]

No way. I've read lots of articles on how poorly managed and ran the Fed LTC insurance program is.

[Anonymous]

OP here - interesting first reply, as I think I'm finding the same thing through my research.

Maybe my alternative question should be, has anyone found a good policy that they recommend? And / or should we focus more on LTC or Disability?

[Anonymous]

I would say disability. My own thinking after looking into LTCI is that it's probably worthwhile only for a few people, and that your 40s is too early to buy it.

Also if you are healthy I would not use the fed program-- it appears that it gets re-bid, with new premium pricing, every 5 years. Although there have been lots of problems with insurers raising rates on "guaranteed level" premiums, it seems the federal program isn't even pretending that the rates you sign up for now will be the rates you are paying for the next 30+ years.

[Anonymous]

If you're in your 40's, married, and a nonsmoker, there are better plans available than the Fed plan.

You can get one that has premiums that are guaranteed to never go up.
The premiums would be refunded to your heirs if you never need care.
And you can get one that has no limit for how much it can pay in benefits over your lifetime.

But, you should only consider LTC insurance after the more important financial priorities are taken care of especially:

no high interest credit card debt,
at least 6 months of emergency savings in a liquid account,
maxing out your retirement account contributions every year, and
adequate disability insurance and
adequate life insurance

If you've taken care of those things and your budget is very tight, then just buy a "starter LTCi policy" that costs $50 to $75 per month. The "starter policy" would be a policy that allows you to buy more benefits in the future, regardless of changes in your health.