I am 63, good health, widower, just retired, own home, zero debt, lifetime annual income $104k before taxes (ss & pension combined), $40 in savings, about $915k in tax deferred savings and my funeral arrangements all prepaid. My CFP recommends a LTC policy that guarantees $10k per month up to $500k and a death benefit of $500k to my heirs if I don't use it (or less the amount paid out if I do). It costs about $1100 per month or about 12.7% of my income. I live simple, don't care to travel or socialize so my spending needs are minimal. Do I need this insurance and is it a good deal? I'd rather just save the money and invest it elsewhere but he says the policy is good because it is not taxed to my heirs?
Actually, that makes me think of another question- does your purposed policy allow that $10k a month to be paid the same regardless of type of facility- is Independent and Assisted Living covered with in-home caregivers?
Sorry for the additional questions - your original post was so very specific but I'm trying to look at it from all the angles. Both my parents had LTC policies that were activated but they were so poorly written- in my opinion- that I honestly think they would have been better off with a good investment.
I'm not a big believer in spending money so kids get a benefit - you could end up shelling out $250k before you ever use it
If you invested $1100 a month and could generate 3% say in a long term muni tax exempt bond fund you'd have $270k in 20 years tax free which of course would pass to your heirs at the value at the time of your death so no taxable income to them if they liquidated the fund
We don't want to burden our children. I pray I will not need or linger longer than the 3 yrs
Expect to pay $750 per month or more. No benefits payable in the first 5 years. After that, the daily benefit starts at $65 per day and gradually increase to a max of about $150 per day after 15 years.
Really? You are better off putting that $750 away ... in 15 years you will have more than the max life benefit of these policies.
Insurance companies are dropping out of this market. People live a long time, and they are losing money on the old policies.
So, look close at the qualifying conditions. You have to have 3 of the 5 following conditions.... cannot walk, cannot toilet, cannot feed yourself (does not mean cook), cannot dress yourself, cannot bathe yourself.
You could be completely bound to a wheelchair, and still not qualify!
The overriding condition is dementia.
Still hard to qualify, hard to keep the benefit. AND! Before you can start collecting reimbursement under this policy..you have to first pay out of pocket up to 90 days yourself. Not qualify for 90 days...actually pay a licensed and certified agency 90 days. If you only have help 5 days a week...then 90 days will actually take 18 weeks to satisfy. Then, even at $150 per day...it covers only about 8 hours.
My Mom has such a policy. Purchased 17 years ago. It is a great policy for her. It pays for up to 10 hours a day for her...it works for her because she has me all the rest of the time...and I actually only use it a few hours a day so that the benefit max. Lifetime payout will stretch for the rest of her expected life.
BUT! They do not write these policies any more. And it was REALLY expensive.
I actually thought the process to get my mom's claim approved was so time consuming by design that some people would just give up and thank goodness I had both financial and health power of attorney - unfortunately since memory care is considered assisted living she only receives 60% of her benefit which doesn't even cover a third of the cost of her facility
If you are crunching the numbers, factor in the percentage of possibilities that you will never need LTC and will leave this earth by so many other various natural occurences.
So, in your financially secure status, arrange to have your own care, on your terms. imo.
For only $200 per month you could get $500,000 of true long-term care insurance.
My earlier reply had some funny math
$1,100 a month at 3% for 20 years would get you ~$360,000
What you have described is NOT long-term care insurance. That's not how long-term care insurance works. Some agent showed you a life insurance policy that would allow for some of the death benefit to be used for long-term care. Those policies are grossly overpriced compared to true long term care insurance.
You state, "BUT! They do not write these policies any more."
Long-term care insurance is available for sale in all 50 states. Over 13 different companies sell long-term care insurance. Your understanding of how these policies work is severely flawed.
Research very carefully the company you choose, you don't want to pay in premiums to be denied on a whim.
#allstatestinks
The "quote" that Katiekate received was not for a long-term care insurance policy. She was talking about a universal life insurance policy that has a "long-term care rider". She said it was "long term care insurance" but it's not. I was simply explaining that she was not accurately describing long-term care insurance.
Secondly, she stated that traditional long-term care insurance (like her mother has) is not available today. That's completely false. Over 13 different insurance companies sell traditional long-term care insurance.