I'm 69, and Ive become a bit scared about being a burden to my family in the event I develop any chronic disease. Is it beneficial to apply for an LTC policy?
Total Comments: 8
Posted: Mon Apr 26, 2010 08:53 pm Post Subject:
ABSOLUTELY! And depending on your state of residence, I would encourage you to obtain a "Partnership" policy, which would provide additional protection from the Medicaid Spend-Down Test in the event you exhaust your LTCI policy benefit and are still in need of LTC. A Partnership policy is not more expensive than a standard LTCI policy, but it does require that you purchase compound inflation protection -- something most of us agents recommend any way.
And if your heart is in good condition, you shouldn't suffer a heart attack when you are quoted a premium at your tender age. LTCI is not inexpensive, and obviously, it would have been better to apply 20 years ago, but even at your age, paying premiums for several years, then experiencing a LTC event, you'll receive back 100% of your premium expense in perhaps as little 3-5 months.
Depending on your state of residence, and your personal situation, a $200/day policy is probably the lowest benefit starting point you should consider. At least it is here in California, where skilled nursing facility care is estimated by the State Dept of Health Services to average more than $220/day. On the other hand, if you're in Mississippi, $100/day is probably a reasonable starting point in the discussion.
LTCI should be on the "radar screen" of every person over age 40 whose liquid net worth is less than $5-$7 million.
Posted: Wed Apr 28, 2010 11:37 am Post Subject:
Is it beneficial to apply for an LTC policy?
It's expensive but it's good for all of us. You won't be able to enroll in an LTC insurance program later on when you need the benefits. It's good that you've thought ahead of time!
Posted: Thu Apr 29, 2010 07:26 am Post Subject:
Apart from the nursing home care, LTC also offers a wide range of services. It covers income and assets of the beneficiaries. Such asset protection levels may vary from one state to another.
Posted: Fri Apr 30, 2010 06:27 am Post Subject:
LTC offers real good coverage towards long-term illnesses e.g. cancer. There are other health problems (e.g. Alzheimer's, Parkinson's etc.) that are covered under LTC.
Posted: Fri Apr 30, 2010 02:48 pm Post Subject:
LTC also offers a wide range of services. It covers income and assets of the beneficiaries
LTC offers real good coverage towards long-term illnesses e.g. cancer.
Both of these statements concerning LTCI are rather misleading.
LTCI does nothing directly concerning the "income and assets of the beneficiaries" (assuming "beneficiary" is referring to the insured, not to one's heirs). And LTCI provides no coverage for "long term illnesses" such as cancer. If "beneficiaries" refers to heirs, LTCI has the potential to help preserve one's savings and assets for their heirs, but it is not an absolute protection for those things -- not like homeowner's insurance pays for losses to personal property. Merely having a "long-term illness" such as cancer, heart disease, or "other health problems" is not sufficient in and of itself to trigger LTCI benefits.
What LTCI is intended to do is to provide cash to cover (in whole or in part) the costs of personal care and certain rehabilitation needs that arise when a person suffers a chronically-disabling event that impairs them in two or more of the six defined Activities of Daily Living (ADLs) -- eating, dressing, bathing, toileting, continence, and transferring -- or, separately, a diagnosis of Alzheimer's disease (or similar cognitive impairment).
Daily benefits up to the dollar limit of the policy are available to pay some or all of the cost of nursing facility care (skilled, intermediate, CCRC, or custodial), home health care services, adult day health care services, rehab services such as occupational therapy, physical therapy, speech therapy, or vocational therapy. Money is available to pay for accommodations such as wheelchair ramps or elevator devices, as well as for respite care (to give a primary caregiver a break from their task). Benefits available vary somewhat from company to company, and depend largely on whether the policy is comprehensive or something less (facility only or home care/community care only).
LTCI does NOT cover the cost of acute care hospitalization for disabilities such as heart attack, stroke, or chronic disorders such as diabetes or cancer. Those costs are borne by medical insurance. In the aftermath of some hospitalizations, there may be continuing impairments in the ADLs that could trigger benefits under a LTCI policy.
But LTCI does not cover one's income in the same way that a Disability Income (DI) policy does. LTCI may initially prevent the forced sale of one's assets or depletion of one's savings to pay for the cost of dealing with a severely disabling event. But it is not protection for one's income or assets, as the opening statement might lead one to believe.
A "Partnership" LTCI policy (available in some but not all states) does provide the additional benefit of protecting one's assets from the Medicaid "Spend-down Test" to the extent that every dollar of benefit paid from a LTCI policy is a dollar of assets exempted from the spend-down requirement if a person exhausts their LTCI benefit but remains in need of care and must now turn to Medicaid for financial assistance.
The primary protection afforded by LTCI is INDEPENDENCE. Having money available at the time of a disabling event gives one options that not having money prevents. With the money from a LTCI policy, a person could pay for a live-in caregiver without having to use their own resources or being confined to a nursing facility of dubious quality. Or they could find the finest nursing facility available and have some or all of the financial need met through their LTCI policy. Without the money to do those things, one becomes dependent on family and friends, or, worse yet, the state to provide assistance with their care. But LTCI will not pay one's mortgage, doctor bills, hospital bills, or other needs unrelated to the limiting effects of their disability.
That's the reason why a "properly protected" person/family has a combination of financial products--retirement plans, savings, life insurance, disability income insurance, auto insurance, homeowner's insurance, and long-term care insurance. And if a business owner, there will be additional needs that can be effectively covered with a variety of other insurance products.
But insureds need to be clear on what each product covers and what it does not. For their agents to give them the false impression that the costs of cancer treatments will be covered by LTCI, or that income and assets will be covered could leave a person exposed to those liabilities at the worst possible moment.
Posted: Sat May 01, 2010 05:04 am Post Subject:
One good thing about long term care insurance is that the policy is guaranteed renewable once it's activated. You'd just need to keep on paying your premiums as agreed.
I hope the premium depends on your age and it would stay flat till the policy exists. Am I right!
Posted: Sat May 01, 2010 05:59 am Post Subject:
If you're enrolling for an LTC insurance program, make sure that you go through the policy document very carefully. There could be a lot of hidden catches. You'll not come to know of these catches till the point you file a claim.
Posted: Sat May 01, 2010 08:03 am Post Subject:
I hope the premium depends on your age and it would stay flat till the policy exists
Yes, beside the fact that all LTCI policies must be "guaranteed renewable for life" (or noncancellable), LTCI premiums are dependent on three factors: AGE (morbidity risk), DAILY BENEFIT ($$), and ELIMINATION PERIOD (time deductible). Obviously, the older one is at time of application, the more expensive the policy will be. Higher daily benefit also increases the cost. The elimination period follows the rule that applies to the basic premise of deductibles: the more you're willing to share (longer waiting period before benefits begin), the lower your premium will be.
The good news about the ELIMINATION PERIOD in LTCI policies is that it is a one-time thing. Even if a person gets better and goes off claim, when the next disabling event occurs, there will not be a new ELIMINATION PERIOD.
As for level premiums, they are not guaranteed. The definition of "Guaranteed Renewable" means, by law, that the insurer must renew the policy as long as the premium is paid, even if a person has had a huge claim, but it may raise the premium if it does so for all persons in the same "class" of insureds (which is usually by "policy form number") -- no individual may be singled out for a rate increase. (Again, rate increases must be approved by the state insurance regulator.)
Many companies have increased premiums over the years for existing policyholders, while some have only raised premiums for newly issued policies. Either way, LTCI rates must be approved by the state insurance regulator before they may take effect. The general thinking is that as the cohort of American senior citizens explodes as we Baby Boomers get there, LTCI rates will have to go up in the future to cover the insurer's risk -- the fastest growing segment of the American population are persons age 85 and older. (This is the "fundamental of insurance" that the Government chooses to ignore when it comes to the provision of benefits under Social Security Retirement and Medicare, and the reason that either the age of retirement and Medicare eligibility will be raised, or contributions from our paychecks will be increased, or, more likely, BOTH will occur in the coming decade.)
If a person is worried about having the money necessary to pay their LTCI premiums in the future, a fixed annuity with a 5% rate of return funded with 20 times the annual premium (or more) will provide the funds for automatic annual premium payments for at least 25-30 years into the future. If premiums go up, or the insured lives to a very ripe old age, more money can be contributed to the annuity in the future. If the insured/annuitant dies, the beneficiary of the annuity receives the remaining proceeds of that contract, with only a small tax implication. This is a WIN-WIN strategy that I've tried to teach other agents to use, but most of them just don't get it -- and most of them are not successfully marketing LTCI either.
It is a perfect strategy for anyone who is age 59 (58-1/2) at the time of LTCI policy issue, because it will not be subject to any early withdrawal penalty tax, nor will it be subject to surrender penalties (if that would not be the case, it's the wrong annuity). Under age 59, the strategy is not entirely viable due to the 10% IRS penalty tax on withdrawals. There is always a taxable event on the interest/gain in the contract paid out with each year's withdrawal (LIFO accounting) -- just need to make sure the client is fully aware of and comfortable with that fact.
If you're enrolling for an LTC insurance program, make sure that you go through the policy document very carefully. There could be a lot of hidden catches. You'll not come to know of these catches till the point you file a claim.
Well . . . yes, like all insurance, there are some exclusions in a LTCI policy. But there are no "hidden catches." It would have been nice if our anonymous poster had alluded more specifically to what he takes a broad swipe at with his comment.
To be honest, the fact is that LTCI policies are generally written in very straightforward, easy-to-understand language, they are not printed in type smaller than 12 points, and some elements are required to be printed in bold type. There's a good reason for this: the policies are considered a "senior product" and our regulatory environment now goes out of its way to attempt to protect seniors from being abused by agents and insurance companies.
So what could possibly be excluded? Care in a government facility (for which there would be no charge to the insured) such as a VA hospital, care provided by a member of one's "immediate family" (the assumption being that no one would charge mom or dad or grandma or grandpa for the privilege of caring for them in the face of adversity) [This does not prevent an RN or therapist from working for the registry or agency that happens to supply caregivers to the insured, and they just happen to assign the insured's daughter to be the caregiver -- the payment goes to the agency, the agency pays the RN].
Preexisting conditions that cause a person's disability may be excluded during the first six months of the policy (but many good LTCI policies have no preexisting condition exclusion--the insurer just does a more thorough job of underwriting instead), disability due to WAR/MILITARY SERVICE, AVIATION, ATTEMPTED SUICIDE, PARTICIPATION IN A RIOT OR ACT OF CIVIL DISOBEDIENCE (the common exclusions seen in all sorts of insurance policies)
[Strangely, California's Insurance Code also allows insurers to include SUICIDE as an excludable condition, but as far as I know, the only long term care needed by a person who commits suicide is mowing the grass on their grave, and an LTCI policy does not pay for that!).
Let's see, what else could be excluded? Oh, INTENTIONALLY SELF-INFLICTED INJURIES, disability due to the insured's INTOXICATION, and perhaps due to the insured's abuse of prescription medications.
There are no "surprises" in this list. If a person does not understand that it takes impairment in any two of the six ADLs to trigger benefits (or diagnosis of Alzheimer's disease or other "cognitive impairment" regardless of interference with the ADLs or not), then, yes, they should have listened more closely to their agent or read the outline of coverage and the policy, or the two pounds of documents required by law to be given to the applicant at or before the first appointment, not the least of which is a specimen "Outline of Coverage" that states all of these things.
So, no, I must vigorously oppose the statement by "anonymous00" that "there could be a lot of hidden catches" in a LTCI policy.
Posted: Mon Apr 26, 2010 08:53 pm Post Subject:
ABSOLUTELY! And depending on your state of residence, I would encourage you to obtain a "Partnership" policy, which would provide additional protection from the Medicaid Spend-Down Test in the event you exhaust your LTCI policy benefit and are still in need of LTC. A Partnership policy is not more expensive than a standard LTCI policy, but it does require that you purchase compound inflation protection -- something most of us agents recommend any way.
And if your heart is in good condition, you shouldn't suffer a heart attack when you are quoted a premium at your tender age. LTCI is not inexpensive, and obviously, it would have been better to apply 20 years ago, but even at your age, paying premiums for several years, then experiencing a LTC event, you'll receive back 100% of your premium expense in perhaps as little 3-5 months.
Depending on your state of residence, and your personal situation, a $200/day policy is probably the lowest benefit starting point you should consider. At least it is here in California, where skilled nursing facility care is estimated by the State Dept of Health Services to average more than $220/day. On the other hand, if you're in Mississippi, $100/day is probably a reasonable starting point in the discussion.
LTCI should be on the "radar screen" of every person over age 40 whose liquid net worth is less than $5-$7 million.
Posted: Wed Apr 28, 2010 11:37 am Post Subject:
Is it beneficial to apply for an LTC policy?
It's expensive but it's good for all of us. You won't be able to enroll in an LTC insurance program later on when you need the benefits. It's good that you've thought ahead of time!
Posted: Thu Apr 29, 2010 07:26 am Post Subject:
Apart from the nursing home care, LTC also offers a wide range of services. It covers income and assets of the beneficiaries. Such asset protection levels may vary from one state to another.
Posted: Fri Apr 30, 2010 06:27 am Post Subject:
LTC offers real good coverage towards long-term illnesses e.g. cancer. There are other health problems (e.g. Alzheimer's, Parkinson's etc.) that are covered under LTC.
Posted: Fri Apr 30, 2010 02:48 pm Post Subject:
LTC also offers a wide range of services. It covers income and assets of the beneficiaries
LTC offers real good coverage towards long-term illnesses e.g. cancer.
Both of these statements concerning LTCI are rather misleading.
LTCI does nothing directly concerning the "income and assets of the beneficiaries" (assuming "beneficiary" is referring to the insured, not to one's heirs). And LTCI provides no coverage for "long term illnesses" such as cancer. If "beneficiaries" refers to heirs, LTCI has the potential to help preserve one's savings and assets for their heirs, but it is not an absolute protection for those things -- not like homeowner's insurance pays for losses to personal property. Merely having a "long-term illness" such as cancer, heart disease, or "other health problems" is not sufficient in and of itself to trigger LTCI benefits.
What LTCI is intended to do is to provide cash to cover (in whole or in part) the costs of personal care and certain rehabilitation needs that arise when a person suffers a chronically-disabling event that impairs them in two or more of the six defined Activities of Daily Living (ADLs) -- eating, dressing, bathing, toileting, continence, and transferring -- or, separately, a diagnosis of Alzheimer's disease (or similar cognitive impairment).
Daily benefits up to the dollar limit of the policy are available to pay some or all of the cost of nursing facility care (skilled, intermediate, CCRC, or custodial), home health care services, adult day health care services, rehab services such as occupational therapy, physical therapy, speech therapy, or vocational therapy. Money is available to pay for accommodations such as wheelchair ramps or elevator devices, as well as for respite care (to give a primary caregiver a break from their task). Benefits available vary somewhat from company to company, and depend largely on whether the policy is comprehensive or something less (facility only or home care/community care only).
LTCI does NOT cover the cost of acute care hospitalization for disabilities such as heart attack, stroke, or chronic disorders such as diabetes or cancer. Those costs are borne by medical insurance. In the aftermath of some hospitalizations, there may be continuing impairments in the ADLs that could trigger benefits under a LTCI policy.
But LTCI does not cover one's income in the same way that a Disability Income (DI) policy does. LTCI may initially prevent the forced sale of one's assets or depletion of one's savings to pay for the cost of dealing with a severely disabling event. But it is not protection for one's income or assets, as the opening statement might lead one to believe.
A "Partnership" LTCI policy (available in some but not all states) does provide the additional benefit of protecting one's assets from the Medicaid "Spend-down Test" to the extent that every dollar of benefit paid from a LTCI policy is a dollar of assets exempted from the spend-down requirement if a person exhausts their LTCI benefit but remains in need of care and must now turn to Medicaid for financial assistance.
The primary protection afforded by LTCI is INDEPENDENCE. Having money available at the time of a disabling event gives one options that not having money prevents. With the money from a LTCI policy, a person could pay for a live-in caregiver without having to use their own resources or being confined to a nursing facility of dubious quality. Or they could find the finest nursing facility available and have some or all of the financial need met through their LTCI policy. Without the money to do those things, one becomes dependent on family and friends, or, worse yet, the state to provide assistance with their care. But LTCI will not pay one's mortgage, doctor bills, hospital bills, or other needs unrelated to the limiting effects of their disability.
That's the reason why a "properly protected" person/family has a combination of financial products--retirement plans, savings, life insurance, disability income insurance, auto insurance, homeowner's insurance, and long-term care insurance. And if a business owner, there will be additional needs that can be effectively covered with a variety of other insurance products.
But insureds need to be clear on what each product covers and what it does not. For their agents to give them the false impression that the costs of cancer treatments will be covered by LTCI, or that income and assets will be covered could leave a person exposed to those liabilities at the worst possible moment.
Posted: Sat May 01, 2010 05:04 am Post Subject:
One good thing about long term care insurance is that the policy is guaranteed renewable once it's activated. You'd just need to keep on paying your premiums as agreed.
I hope the premium depends on your age and it would stay flat till the policy exists. Am I right!
Posted: Sat May 01, 2010 05:59 am Post Subject:
If you're enrolling for an LTC insurance program, make sure that you go through the policy document very carefully. There could be a lot of hidden catches. You'll not come to know of these catches till the point you file a claim.
Posted: Sat May 01, 2010 08:03 am Post Subject:
I hope the premium depends on your age and it would stay flat till the policy exists
Yes, beside the fact that all LTCI policies must be "guaranteed renewable for life" (or noncancellable), LTCI premiums are dependent on three factors: AGE (morbidity risk), DAILY BENEFIT ($$), and ELIMINATION PERIOD (time deductible). Obviously, the older one is at time of application, the more expensive the policy will be. Higher daily benefit also increases the cost. The elimination period follows the rule that applies to the basic premise of deductibles: the more you're willing to share (longer waiting period before benefits begin), the lower your premium will be.
The good news about the ELIMINATION PERIOD in LTCI policies is that it is a one-time thing. Even if a person gets better and goes off claim, when the next disabling event occurs, there will not be a new ELIMINATION PERIOD.
As for level premiums, they are not guaranteed. The definition of "Guaranteed Renewable" means, by law, that the insurer must renew the policy as long as the premium is paid, even if a person has had a huge claim, but it may raise the premium if it does so for all persons in the same "class" of insureds (which is usually by "policy form number") -- no individual may be singled out for a rate increase. (Again, rate increases must be approved by the state insurance regulator.)
Many companies have increased premiums over the years for existing policyholders, while some have only raised premiums for newly issued policies. Either way, LTCI rates must be approved by the state insurance regulator before they may take effect. The general thinking is that as the cohort of American senior citizens explodes as we Baby Boomers get there, LTCI rates will have to go up in the future to cover the insurer's risk -- the fastest growing segment of the American population are persons age 85 and older. (This is the "fundamental of insurance" that the Government chooses to ignore when it comes to the provision of benefits under Social Security Retirement and Medicare, and the reason that either the age of retirement and Medicare eligibility will be raised, or contributions from our paychecks will be increased, or, more likely, BOTH will occur in the coming decade.)
If a person is worried about having the money necessary to pay their LTCI premiums in the future, a fixed annuity with a 5% rate of return funded with 20 times the annual premium (or more) will provide the funds for automatic annual premium payments for at least 25-30 years into the future. If premiums go up, or the insured lives to a very ripe old age, more money can be contributed to the annuity in the future. If the insured/annuitant dies, the beneficiary of the annuity receives the remaining proceeds of that contract, with only a small tax implication. This is a WIN-WIN strategy that I've tried to teach other agents to use, but most of them just don't get it -- and most of them are not successfully marketing LTCI either.
It is a perfect strategy for anyone who is age 59 (58-1/2) at the time of LTCI policy issue, because it will not be subject to any early withdrawal penalty tax, nor will it be subject to surrender penalties (if that would not be the case, it's the wrong annuity). Under age 59, the strategy is not entirely viable due to the 10% IRS penalty tax on withdrawals. There is always a taxable event on the interest/gain in the contract paid out with each year's withdrawal (LIFO accounting) -- just need to make sure the client is fully aware of and comfortable with that fact.
If you're enrolling for an LTC insurance program, make sure that you go through the policy document very carefully. There could be a lot of hidden catches. You'll not come to know of these catches till the point you file a claim.
Well . . . yes, like all insurance, there are some exclusions in a LTCI policy. But there are no "hidden catches." It would have been nice if our anonymous poster had alluded more specifically to what he takes a broad swipe at with his comment.
To be honest, the fact is that LTCI policies are generally written in very straightforward, easy-to-understand language, they are not printed in type smaller than 12 points, and some elements are required to be printed in bold type. There's a good reason for this: the policies are considered a "senior product" and our regulatory environment now goes out of its way to attempt to protect seniors from being abused by agents and insurance companies.
So what could possibly be excluded? Care in a government facility (for which there would be no charge to the insured) such as a VA hospital, care provided by a member of one's "immediate family" (the assumption being that no one would charge mom or dad or grandma or grandpa for the privilege of caring for them in the face of adversity) [This does not prevent an RN or therapist from working for the registry or agency that happens to supply caregivers to the insured, and they just happen to assign the insured's daughter to be the caregiver -- the payment goes to the agency, the agency pays the RN].
Preexisting conditions that cause a person's disability may be excluded during the first six months of the policy (but many good LTCI policies have no preexisting condition exclusion--the insurer just does a more thorough job of underwriting instead), disability due to WAR/MILITARY SERVICE, AVIATION, ATTEMPTED SUICIDE, PARTICIPATION IN A RIOT OR ACT OF CIVIL DISOBEDIENCE (the common exclusions seen in all sorts of insurance policies)
[Strangely, California's Insurance Code also allows insurers to include SUICIDE as an excludable condition, but as far as I know, the only long term care needed by a person who commits suicide is mowing the grass on their grave, and an LTCI policy does not pay for that!).
Let's see, what else could be excluded? Oh, INTENTIONALLY SELF-INFLICTED INJURIES, disability due to the insured's INTOXICATION, and perhaps due to the insured's abuse of prescription medications.
There are no "surprises" in this list. If a person does not understand that it takes impairment in any two of the six ADLs to trigger benefits (or diagnosis of Alzheimer's disease or other "cognitive impairment" regardless of interference with the ADLs or not), then, yes, they should have listened more closely to their agent or read the outline of coverage and the policy, or the two pounds of documents required by law to be given to the applicant at or before the first appointment, not the least of which is a specimen "Outline of Coverage" that states all of these things.
So, no, I must vigorously oppose the statement by "anonymous00" that "there could be a lot of hidden catches" in a LTCI policy.
'Tain't so, McGee!
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