Long term care insurance - worth it?
June 3, 2008 12:37 PM Subscribe
Calling all insurance pros: Is it worth keeping my long term care insurance?
I have long term care insurance policies for myself and my wife (both approaching 60). The current premium is $978 per year for each of us. We started the policies about 10 years ago. At the time, the premium was $684 a year, but it has been raised several times. There is a 5% annual benefit increase provision, so the daily nursing care benefit currently is $264, with a limit of $289,080, for each of us. So, its the equivalent of 3 years of care, at that daily rate. The policies include home health care benefits and spousal waiver of benefits provisions. There is a 90-day elimation period (no benefits payable until period of care passes that point).
When it comes to health, home and auto insurance, I am risk-averse, and would want to avoid a situation of eating up other assets to pay for nursing care. On the other hand, 2 grand a year total for the 2 of us is getting a bit steep.
I know I've "invested" around $15K into these policies, but that's water under the bridge. My questions are:
Is $978 a year a good deal for the benefits involved?
Are there better deals?
Do I get any benefit from continuing these payments now, versus just letting it lapse and restarting policies when we are, say, 70?
Thanks for any insights.
I have long term care insurance policies for myself and my wife (both approaching 60). The current premium is $978 per year for each of us. We started the policies about 10 years ago. At the time, the premium was $684 a year, but it has been raised several times. There is a 5% annual benefit increase provision, so the daily nursing care benefit currently is $264, with a limit of $289,080, for each of us. So, its the equivalent of 3 years of care, at that daily rate. The policies include home health care benefits and spousal waiver of benefits provisions. There is a 90-day elimation period (no benefits payable until period of care passes that point).
When it comes to health, home and auto insurance, I am risk-averse, and would want to avoid a situation of eating up other assets to pay for nursing care. On the other hand, 2 grand a year total for the 2 of us is getting a bit steep.
I know I've "invested" around $15K into these policies, but that's water under the bridge. My questions are:
Is $978 a year a good deal for the benefits involved?
Are there better deals?
Do I get any benefit from continuing these payments now, versus just letting it lapse and restarting policies when we are, say, 70?
Thanks for any insights.
Also, one other thought: a few states (most notably New York) have started "Partnership" programs that allow households to protect their assets and still qualify for Medicaid, provided that the individual who needs long-term care had a LTC insurance policy and exhausted the benefits. Google leads me to believe that the Vermont legislature is at least considering a similar proposal. I have no idea how likely it is that your state will actually start such a program, but it might be one reason to keep your policy--in that case, having LTC insurance would shield your assets above and beyond the $200K that the policy itself covers, by allowing you to access Medicaid without spending down all your assets and forcing your spouse to live below the poverty line.
posted by iminurmefi at 1:31 PM on June 3, 2008
posted by iminurmefi at 1:31 PM on June 3, 2008
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The success of this approach seems questionable. Most regular health insurance isn't sold on a guaranteed-issue basis (that is, an insurer doesn't have to sell anything to you just because you're willing to pay), and long-term care insurance is about 20 years behind regular health insurance in terms of what the states are doing to protect consumers. Whatever you decide to do, definitely don't assume that you'll be able to buy insurance again if your policy lapses--I'd assume that you won't be able to, and make your decision based on that.
I'm not familiar enough with LTC insurance to know whether $978 per year is a good deal, but it seems like you might be able to go to an insurance broker and price out other policies without dropping your current policy. As to whether $978 is a good value: that's something you have to decide. Most people aren't aware that Medicare has a very, very limited benefit for LTC. If (when?) individuals end up needing long-term care services, the most common scenario is to either rely on family members for unpaid care, or eventually end up in a nursing home relying on Medicaid (the federal program for the poor and disabled). The major problem with the latter route is that you are forced to burn through all of your assets and income to qualify, and if you're married, you might end up in a situation where one spouse needs nursing-home level care, and the other spouse is forced to live in poverty with no assets in order for the household to continue qualifying for Medicaid. ("Paper" divorces in this situation are not uncommon, but that's not an optimal solution for a lot of reasons, not least of which is that you'd presumably like your spouse to continue making medical decisions for you.)
The Vermont Department of Insurance (the state it looks like you're located in) has a brochure about different metrics for evaluating your LTC insurance policy that might be useful. It also has a list of contacts at the end that will talk you through your options--they might have more state-specific knowledge about how good the policy sold by your company is.
posted by iminurmefi at 1:25 PM on June 3, 2008