Clueless about whether to buy long term care insurance

[Anonymous]

Hello money people,

Hubby just got a new federal job and we have the option to buy long term care insurance at reduced underwriting w/in 60 days. Does anyone have a view on whether long-term care insurance is worth the cost? For the lowest option, which would pay out $150/day for 3 years, it is $77/pay period. This seems pricey. DH is in his late 40s and I'm in my late 30s. He earns about $80k/year and I earn about $300 k/year. I have a $1 mill life insurance policy on myself (none on DH) but have no long term care insurance. Any advice is appreciated!

[Anonymous]

I'll assume the policy will cover the both of you, even in DH is deceased at the time you need it? If the payout is tied to an inflation index, I might do it.

OTOH, you're paying $2,000/yr. for 165K, max, that you won't need for 30 years or more. If you put the $77 in a low cost index fund, you will do better over that time horizon.

[Anonymous]

Anonymous wrote:I'll assume the policy will cover the both of you, even in DH is deceased at the time you need it? If the payout is tied to an inflation index, I might do it.

OTOH, you're paying $2,000/yr. for 165K, max, that you won't need for 30 years or more. If you put the $77 in a low cost index fund, you will do better over that time horizon.

From what I can tell it only covers DH...it builds in 4% inflation. Good point about the index fund.

[Anonymous]

From what I can tell it only covers DH...it builds in 4% inflation.

Neither of these things is good. A flat rate 4% inflation adjustment is pretty self-serving to the underwriter and not the policy holder.

I'd go with the index fund.

[Anonymous]

Don't do it. My MIL bought a policy they don't allow new members in so it is a closed group. So anyhow the rates go up and up because no new people can come into the plan and the people in it are getting sicker and sicker.

[Anonymous]

As a fed you can buy in at anytime. I don't think it is worth it when so young. I would wait until you are both older. That is what we are planning.

[Anonymous]

Anonymous wrote:As a fed you can buy in at anytime. I don't think it is worth it when so young. I would wait until you are both older. That is what we are planning.

But later it is subject to medical underwriting.

Fed LTC is expensive, and getting more so. Do a google search for articles, they just announced a rate hike. Make sure what you are being quoted won't go up again in a month.

My basic read on Ltc insurance is that it is good in theory but the numbers never work out. I'd only go in for it if there is a specific medical need you're worried about.

One thing to consider is that not only spouses, but also parents and parents in law, can sign up. It may not be worthwhile for you, but let the rents know they can look into it.

[Anonymous]

I actually bought it in my late 20s. I did the math and for the best option it was cheaper to get in at those rates now and pay them for decades then pay the higher rate quoted in today's dollars for a $50 year old. Yes they did announce a rate hike recently this has been the first one in almost 8-9 years since I've had my policy.

Also just want to point out that I think you are underinsured. And you should consider getting insurance for your husband even though he makes less than you. I make about $130 and have a $2 million 30 year term policy. Fegli is too expensive and the rates go up so get yourself a private policy and once in place cancel fegli.

[Anonymous]

The fed LTC contract is rebid every 5-7 years so you are guaranteed to see rate hikes over the next 30 years or so before you need it. If I was going to buy, which I probably won't, I'd get a private policy.

Life insurance is similar-- if you can get your own policy instead of fed coverage you should.

[Anonymous]

I agree with self insuring by saving the premiums in an index fund. My grandparents are starting to use their LTC insurance and not only does cover only half of the care needed, the paperwork is s massive headache that my mom helps them with.

[Anonymous]

Yes, in practice it can be a nightmare to try to claim it. I would self-insure if you can.

[Anonymous]

Just a slightly different perspective: my mom bought a policy when she was 50. She had a stroke two years later and will ultimately get way more out of it than she put in. She shopped around and got a great policy that has no limit on the number of years for pay-off, but instead has a monthly limit, up to $500,000. It looks like she'll max out the policy.

My granddaddy had one too. He started using it when he got cancer. He barely survived the elimination period. So, he lost that particular insurance gamble.

The policy terms you quote don't sound very good and I think you could look around and get better terms. Also, unless there is medical history, I would wait until you're older. I now have significant medical history, but wouldn't buy it before 50.

[Anonymous]

It covers home care, but that's all. Really no facility. Facilities cost betwen 10 and 20k PER MONTH. Exclusion periods are usually 6 months. You need to have a wad of cash to be older or informed.
In order to use the $$ for in home help, it's a pile of paperwork for each day, proof of nursing qualificationschool, and a daily limit.

[Anonymous]

It covers home care, but that's all. Really no facility. Facilities cost betwen 10 and 20k PER MONTH. Exclusion periods are usually 6 months. You need to have a wad of cash to be older or informed.
In order to use the $$ for in home help, it's a pile of paperwork for each day, proof of nursing qualificationschool, and a daily limit.

[Anonymous]

Correctionso on tbe above...infirmed. not informed, school should be deleted. Autocorrect fail.