securing LTC insurance, & other approaches for LTC savings

[CloudBee]

We've started to research LTC policies for ourselves. (I'm in my late 30's, and DH is in his late 40's.)

FIL worked in the insurance industry and snagged LTC policies for he and MIL many years ago when they were cheap. (With huge payouts.) Unfortunately he passed unexpectedly in August, less than a year after moving into assisted living. MIL is in memory care and we have another 4.5 yrs left before her payouts expire. Then we will use her savings. Their LTC policies have been so helpful over the last few years. Some decisions regarding care have been less emotional because we knew their plan could cover it. (MIL is in her late 80's.)

New LTC policies today aren't as cushy as they were when my ILs took out policies, and cost quite a bit more.

Has anyone on here in their 30's-40's taken out a LTC policy recently? Advice on which insurers offer good plans, and who to avoid? I know this is often case by case, but if you've had an overly good or bad experience, please share.

What other avenues are you using to save for future LTC needs? We are very debt averse and are completely in the green (no debt, no mortgage), with a decent amount residing in investments. Trying to decide the best way to allocate our savings/investments as it doesn't seem that we can rely on a LTC policy to cover the bulk of future assisted living requirements. We want to plan with the assumption that at least one of us may end up needing LTC.

Thanks!

[zaneyzoo]

I would meet with someone who is licensed to sell LTC as well as life. The industry has changed a lot on both the life insurance side and the LTC side. LTC policies are getting very expensive and like you said, are way less cushy than before.

There are life insurance policies that you can piggy back LTC-like coverage with a life policy. I personally like them. On LTC policies, if you don't add the return of premium rider, which is $$$, it's typically a use it or lose it premium. If you're able to piggy back the coverage, it's more cost effective in the long run and you'll either have a death benefit, LTC coverage or both.

[ohgillian]

zaneyzoo , is it too early though for them to be buying? I looked into this a few years ago (around age 40) and the consensus in various article online seemed to be that you shouldn't buy this early; I asked my planner and she said the same thing.

I mean I am all for planning ahead, so if I should revisit this I will.

ETA: CloudBee, sorry if my post was worded weirdly like "let's talk about cloudbee in 3rd person." I didn't really mean it the way I think it came out. 

For your question about what else are people doing to pay for LTC, I don't know if this is a strategy but I'm just trying to have enough money that I can afford whatever? PDQ my dad was in assisted living, but had enough investments that even paying for a nice AL, he was still increasing his net worth every year from dividends, etc. I mean, #goals. But I also do plan to buy a LTC care policy at some point. 

[zaneyzoo]

ohgillian, typically the sweet spot for a traditional LTC is mid-late 50's, however if they choose to do a life insurance piggy back with it, the earlier the better. That being said, if there is a family history of early on-set illness/disease that could knock them out of coverage down the road, it's not a bad thing to look into now.

As with any big decision in life, a crystal ball would certainly help - lol!

[awkwardpenguin]

The main purpose of LTC insurance is to protect assets to enable heirs to inherit them. But it's not a well functioning insurance market, and coverage is very expensive.

We're just saving as much as we can and plan to forgo LTC insurance. We've been through a few different scenarios with grandparents and in all cases their actual LTC expenses were within their ability to pay, and they all had much lower means than we do. My wife's grandmother did go through Medicaid spend down but did not exhaust her assets before her death.

My mom (early 70s) recently met with an elder care attorney who said these days most people pay out of their income and assets. He had figures on assisted living and nursing care and it seemed like the projected average long term care costs are not actually as catastrophic as they may seem at first glance because people don't tend to need care for a long time. The average length of stay in a nursing home is 28 months. I think the scenario where someone needs very extended long term care is pretty rare, and everyone is provisionally insured by Medicaid if they run out of assets.

Edited to add: our retirement projection includes $80k/year in LTC costs for each of us in the last 3 years of life.  So we do include it in our planning.

[shortstax]

DH and I bought policies 2 years ago (at 36 & 39). Our plan was offered through my work, and I'm sure it was not the most rational decision. However, with my father's diagnosis of early-onset Alzheimer's and the same disease running on my mother's side I decided for peace of mind I'd prefer to have the LTC insurance. In fact, every month when the premium is withdrawn from my paycheck, DH and I are all "god, I hope we're just throwing this money down the drain."

I don't have the plan details available right now, but our insurance is through Unum. Also, our plan allowed us to "frontload" and pay the premiums over the first 10 years. After that, we don't have any further premiums and the plan continues until death. We figured this would be best as we can knock out the expense while we're in our (allegedly) highest earning years.

Good luck on your search. PM me if you're curious about the rates on my plan, and I'd be happy to send you what I have later.

[ssmjlm]

I can get it through work, but everyone says to wait until mid-50s.

That said, my grandparents didn’t have it and my grandfathers pension paid more than covered memory care for my nana. They didn’t even have to use any other monthly payouts from other investments.

I’ve found from reading in more FI groups that over insuring can be an issue with our generation instead of financial planning in other vehicles. It’s been somewhat interesting to read the different perspectives of late in life care.

[pearls]

DH any I have been talking about looking at it as well. (Mid and late 30's). My grandfather's pension/savings was not enough to sustain my grandmother's nursing home costs and the taxes on the house she still owned (she was in nursing home care for 4+ years before she passed) so my parents ended up paying for part, while helping pay upkeep on the empty house, and then the rest of the nursing home care was paid by the sale of the house when she passed. (I was told she would have had to move into not as nice of a place if they hadn't paid and she was only at a mid level place as it was). I'd like to avoid a potential for a situation like that as it caused some family strife at the time as to who or who couldn't afford to help pay the nursing home costs.

I think had they done planning while she was in better health maybe the issue of the sale of the house could have been avoided, but she was adamant that everything remain as my grandfather had it before he passed so I'm not sure what was in place when she had to go to the nursing home.

Maybe I should be understanding this but can anyone help me understand why the guidance is to wait with this type of coverage? Is it due to the premium costs and just that people typically don't need it yet?

[mslhb]

I planned to shop for this when I turned 50 and DH is 55. My parents have one. My dad used just a little bit of the policy before he passed. My mom has now been in her assisted living facility for 2.5 years. She still has I think another 4ish years of payouts left if we get that far. For what my parents paid she has gotten a huge benefit. Her health declined very rapidly and I was the one who had to figure out care and how the insurance works. Her policy is through genworth and they have been great. I have no idea when the “right time” is to sign up for a policy but we definitely will be pursuing one.