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Old 12-31-2015, 02:44 AM
 
72,132 posts, read 72,094,203 times
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Quote:
Originally Posted by thedwightguy View Post
LONG TERM CARE vis a vis the USA: You're in your early forties? That's exactly the time to setup long term care policies. Our parents in Calif. were always told they were "overinsured". It's sure paying off now, but the type of policy they got isn't sold any more. Too many people, mom included, are living longer than the insurance companies planned. How dare they???
folks are not staying dead longer today ha ha ha
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Old 12-31-2015, 06:02 AM
 
27 posts, read 25,285 times
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Quote:
Originally Posted by Robyn55 View Post
But no one should ever forget that LTC insurance isn't any different than auto or homeowners' insurance. Your rates with a company can go up dramatically over a period of a few years. Your insurer can go out of business. Yada yada yada. Also - LTC insurance usually pays a specific dollar amount of benefits which is usually less than those who spend the most on LTC will spend (and more than those who spend the least pay). Since the OP is in his/her 40's - I suggest as an alternative simply putting X into an account labeled LTC insurance account. A specific amount every year. Invest it in something like bond/stock index funds. By age 80 (when most people wind up needing LTC care if they ever need it) - it should be a tidy amount of money. And more reliable than any insurance policy. LTC insurance is very actuarial (X dollars for Y years mostly likely to be paid out Z years in the future) - and it is pretty easy to get the same benefits from a personal investment account as opposed to buying the insurance if one starts fairly early. Robyn

Very succinct Robyn. I agree with you. Plus, another benefit of self insuring for LTC is being able to offset taxes from RMD's from a traditional IRA after age 70 1/2. I have estimated my RMD's 16 years from now using various calculators and I am sure we will be in a higher tax bracket in the latter years factoring in pensions and Social Security. If LTC becomes a reality, at least we will be able to offset taxes due from RMD's with LTC costs.
Self insuring LTC costs for high net worth couples seems the best option.
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Old 12-31-2015, 07:25 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,976,764 times
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Quote:
Originally Posted by mrluckycharms View Post
Very succinct Robyn. I agree with you. Plus, another benefit of self insuring for LTC is being able to offset taxes from RMD's from a traditional IRA after age 70 1/2. I have estimated my RMD's 16 years from now using various calculators and I am sure we will be in a higher tax bracket in the latter years factoring in pensions and Social Security. If LTC becomes a reality, at least we will be able to offset taxes due from RMD's with LTC costs.
Self insuring LTC costs for high net worth couples seems the best option.
I agree the tax thing is important. The year my late FIL entered a SNF was the year he stopped paying income taxes (because of large medical deductions).

Also - I am taking the OP's age into account. One's 40's are usually the time one is at his/her peak earnings. The OP can decide whether the family has the means to save and do what I'm talking about.

Also - if one becomes disabled pre-65 while still working - one can qualify for Social Security Disability (SSDI). It wouldn't pay for the whole cost of a SNF - but it would pay something.

Also - as a practical matter - the OP's age enters into the equation in other ways. The late husband of a friend of mine needed LTC in his 50's due to a Parkinson's kind of disease. And no "senior" SNF here would admit a man in his 50's. Men had to be 65+ (I'm not sure why although I have my suspicions). So my friend wound up hiring a CNA on a pretty much full time basis (40 hours/week) to help her with her husband at home. Between the 2 of them (my friend was a healthy woman in her early 50's) - they got the job done. For a lot less than the cost of a SNF. I got the impression there were places here that dealt primarily with non-seniors who needed this kind of care - but that they were even more dismal than the average senior SNF.

To the extent that one needs some kind of insurance - I was impressed by this article comparing the advantages/disadvantages of LTC insurance versus "longevity" insurance (deferred fixed annuities).

Forbes Welcome

I guess I'm keeping in mind my personal experiences. When it comes to our grandparents and parents. Of our 8 grandparents - only 2 lived in SNFs at the end of their lives. Two widowed grandmothers in their 80's. Only 1 parent has. My late widowed FIL - again in his 80's. It doesn't seem that many people need SNFs until they're in the 80's. And most that do have lost their spouses. Or their spouses are so old/frail that they're no longer in a position to be caregivers.

The only exception I've seen in some cases (not our family but other families) is early onset dementia. But dementia seems to be at least in part based on genetics/family history. So I'd look at one's family history when trying to analyze that factor/possibility.

Overall - my husband and I and our families didn't think at all about LTC when we were in our 40's. The first time we paid attention to it was when we were in our 60's - when some of our parents needed it. To the extent I think about it now - if I wanted to buy additional protection - I'd look into longevity insurance.

Note that are plenty of articles about LTC insurance these days for the OP to read. E.g.

Long-Term-Care Insurance: Is It Worth It? - WSJ

The market is kind of a mess these days - and I think it's only going to get worse. Robyn
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Old 12-31-2015, 07:31 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,976,764 times
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Quote:
Originally Posted by mathjak107 View Post
most folks will never ever segregate a sum of money from their main portfolio for ltc usage .

plus i firmly believe that ltc money like any insurance money should not be put at risk the same as your other investments .

you can't risk an extended down turn or 16 years of little growth if it is 2000 all over again .

so that means ideally low return investments that likely will fail keeping up with inflation and healthcare costs .

for just a small percentage of the potential gains of leaving that money invested in your regular investments you can pay for the policy and have more left over .

for most folks self insuring ends up being a disaster .

most of the cases our estate attorney sees are those who were so called self inuring . only now the community spouse goes in to survival mode and wants to cut corners every where they can as well as first develop a plan after the fact in case the money runs out and assets are at risk .

insurance is not the only way to prepare but the fact is few of those folks who say the are self insuring have any plan in place including letting their spouse know what assets are to even be sold .

self insuring for most of those who do so is not a comprehensive plan and hope is really their strategy that it isn't them .
The problem with your thinking is the same woes that might befall individual investors are a huge problem for insurance companies too.

Forbes Welcome

I think there's a good chance that long term care insurance products won't even be around in 20 years. Robyn
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Old 12-31-2015, 08:05 AM
 
Location: Austin
29,557 posts, read 16,540,173 times
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Quote:
Originally Posted by mathjak107 View Post
there are so many types of annuity's so when discussing them you really need to be specific .

i would not do a variable annuity but if i wanted a steadier guaranteed income flow i would consider an immediate annuity in combo with my own investing .

they add diversification from financial markets that you can never have on your own . they get to invest in dead body's . those who die pay for those who live .

while you safely may be limited to about a 4% initial draw , spia's are close to 6% draws for a 65 year old . that is a huge increase in cash flow .

that helps keep depleting the cash and bond portions of a portfolio sooner requiring refilling from equity's sooner .
This is true. And most people don't understand why they should buy a SPIA. Obviously, some shouldn't. It's all about transferring risk. If you are 100% invested in equities, you own 100% of the risk. On average you will do better than buying a SPIA. But not always. It depends on when you need the money.

Generally, SPIAs guarantee a death benefit and guarantee some kind of growth and some kind of payout. For example, I have one that guarantees 6% growth and 5% lifetime payout. So the insurance company is taking the market risk and I pay them for that. I wouldn't want 100% of my retirement plan to be in annuities.

I think that anyone who doesn't have a significant part of their retirement plan covered by fixed income (defined benefit plans or annuities) is making a huge mistake.
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Old 12-31-2015, 08:11 AM
 
Location: Austin
29,557 posts, read 16,540,173 times
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Quote:
Originally Posted by mrluckycharms View Post
Yup.I'm unsophisticated.
I'm glad we agree. Wall street loves gullible investors. For example, Merrill Lynch makes over 4 billion profit each year. They love unsophisticated investors.
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Old 12-31-2015, 09:05 AM
 
72,132 posts, read 72,094,203 times
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Quote:
Originally Posted by Roadking2003 View Post
This is true. And most people don't understand why they should buy a SPIA. Obviously, some shouldn't. It's all about transferring risk. If you are 100% invested in equities, you own 100% of the risk. On average you will do better than buying a SPIA. But not always. It depends on when you need the money.

Generally, SPIAs guarantee a death benefit and guarantee some kind of growth and some kind of payout. For example, I have one that guarantees 6% growth and 5% lifetime payout. So the insurance company is taking the market risk and I pay them for that. I wouldn't want 100% of my retirement plan to be in annuities.

I think that anyone who doesn't have a significant part of their retirement plan covered by fixed income (defined benefit plans or annuities) is making a huge mistake.
spia's do not guarantee any growth , they are not an investment , they are just income insurance and have no growth vehicle , nor with out an insurance rider have any death benefit .

you have to add what amounts to a life insurance option .

spia's work the way they do just because they offer no death benefit and those who die add mortality credits to those who live .

you can buy a joint spia which carry's over to a spouse .

some insurers attempt to bundle an spia and a death benefit together and charge you accordingly . once you get involved with options you defeat the higher cash flow advantage of the spia .
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Old 12-31-2015, 09:12 AM
 
72,132 posts, read 72,094,203 times
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Quote:
Originally Posted by Robyn55 View Post
The problem with your thinking is the same woes that might befall individual investors are a huge problem for insurance companies too.

Forbes Welcome

I think there's a good chance that long term care insurance products won't even be around in 20 years. Robyn
not really the same issues. market cycles do not effect the insurer the way they do us with sequence risk . . they have something we can never have . DEAD BODY'S . they are well diversified in to dead body's .

IF 2008 , ONE OF THE BIGGEST DEBACLES SINCE THE GREAT DEPRESSION HAD NOT PRODUCED ONE FAILED ANNUITY OR LTC POLICY then odds are pretty good they have way higher odds of survival then we do .

getting a 3rd party to shoulder risk who is not dependent on just markets and rates is never a bad idea .

the biggest risk we have is not a big drop , it is a prolonged modest drop while we are spendiing down early in to retirement .

Last edited by mathjak107; 12-31-2015 at 09:22 AM..
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Old 12-31-2015, 10:07 AM
 
Location: Close to an earthquake
890 posts, read 680,885 times
Reputation: 2390
Quote:
Originally Posted by mathjak107 View Post
for most folks self insuring ends up being a disaster .
May I kindly ask what statistics you base your statement upon?

While I don't have statistics to support my statement, it is nonetheless that most folks do self-insure their long-term care needs and it doesn't end up being a disaster. Take an inventory of 20 people you know who died in the last 5-10 years. How many of them ended up in a disaster because they didn't have long-term care insurance. I'll answer my question by saying not most and maybe some or one.

I think it's always easy to be overwhelmed with emotion with that one or two case episode of someone who met the fate you describe. I just don't see it. If you do, you have a sphere of influence and community so much different than mine and I would go so far to say as that of most others here.
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Old 12-31-2015, 10:12 AM
 
72,132 posts, read 72,094,203 times
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the basis is our elder care attorney is one of the largest in the tristate area and we have had many discussions about me self insuring which i eventually decided against .

and nooooo he does not sell insurance . his case load has changed more an more through the years to folks who thought they would self insure and now that reality struck are petrified of being impoverished as they had no plan in place for what happens when funds run low . or the funds didn't grow to what they thought . .
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