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Old 12-31-2015, 05:42 PM
 
10,824 posts, read 8,088,333 times
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Quote:
Originally Posted by borninsac View Post
I can think of two client experiences who ended up needing long-term care and neither had a LTC policy.
I've posted several times before on this, I've had several relatives (mother, aunt, husband's aunt and uncle, mother-in-law) who went into ALC's. Only my mother had an LTC policy. None were remotely wealthy. My mom had a gold-plated (no waiting period, no max) policy she had purchased in the 1980s. It paid off fine but when all was said and done, she paid out way more in premiums through the years than she collected in benefits. The outcome was that she left her children an inheritance that we didn't need.

Aunts, uncle, and mother-in-law all managed fine with income streams derived from SS, small pensions, and rental income or house proceeds. DH's uncle's entry into an ALC preceded his wife by about a year. Between them they had 2 work pensions, SS, a modest nest egg, and a modest paid-for house. It all worked out fine, financially. His work pension, SS, and withdrawals from the nest egg paid for his care while his wife lived in their house on her pension and SS. When she went into the ALC, the children sold the house and banked the money toward their joint care. There was never a shortage.
Mother-in-law is beginning her 3rd year in an ALC. She has no pension, collects widow's SS and VA aid & attendance, and rental income from her house. That combined income flow meets her monthly expenses. She has a nest egg of about 60k and long range we may have to start pulling from that. She's 93 though and if it goes long-range, she'll likely have to move to SNF so Medicaid will kick in.

Quote:
The lesson here is that your expenses go down once you become a LTC ward because you're not out running around spending money for vacations, clothes, giving money to deadbeat adult children and relatives, making charitable donations, etc. etc. So what I learned from these two elderly ladies is that their marginal cost of being in LTC-land wasn't that significantly more than what they were spending before. This is important and should be understood.
Word to this. Because of our experiences with our relatives, DH & I have come to know many families with loved ones in ALC's and it is absolutely true that the expenses outside the monthly fee are minimal: lotions, adult diapers, linens, snacks, that's about it.
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Old 12-31-2015, 09:51 PM
 
2,952 posts, read 1,647,900 times
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Quote:
Originally Posted by mrluckycharms View Post
Yup.I'm unsophisticated. Think I touched a nerve. You probably own a whole life policy as well.
I went from a net worth of $0 to over $4.5 million in 32 years all thru my own investing .....most in the market. But hey you keep handing your hard earned dollars over to an insurance salesman. The commissions you pay are funding his retirement. Annuities are for people that too stupid or too afraid to invest on their own.
They need someone else to do it for them. This is why the Edward Jones and the Raymond James are raking in billions. One of the first things these sharks will try to sell you is an annuity....immediate, variable, indexed. You name it , they got it. They have convinced all the sheep that they aren't smart enough to do it on their own.
My RIA buys annuities ever year for his portfolio. His net worth is 5 times yours. And mine is well over yours & we did it in only 9 years. Small business owners with a hot product.

Why would any one who is so investment savy ever buy investment at retail? Which is what you do when you state buying from Raymond James etc.

If one knows enough about investing you stay away from the banks and brokerage houses.

I own a whole life/ltc policy. I can more than afford it.And the whole life will help pay the taxes on my estate if i don't use the LTC.

Frankly your advice reminds me of these traveling clowns who went on the road in the 90's preaching buy term and invest the rest. Only that doesn't work for most people. They spend the difference. Opinions are like _________ everyone has one.

Last edited by foundapeanut; 12-31-2015 at 10:03 PM..
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Old 01-01-2016, 03:36 AM
 
71,981 posts, read 72,020,102 times
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Quote:
Originally Posted by borninsac View Post
I can think of two client experiences who ended up needing long-term care and neither had a LTC policy.

The first was a widow. She was a retired government employee and earned a small pension plus social security. This was many years ago. Her son placed her in a long-term care home (not a SNF). The cost was $3,500 per month. Again, this was a long time ago.

What I noticed about her is that she no longer paid any income taxes because the long-term care expense (medical expense deduction) brought her taxable income below a taxpaying amount.

What I also noticed in reviewing her check register is that besides the $3,500 per month, the only regular expenses were some prescription co-pays and diapers. In other words, she was for the most part, her annual cost of living wasn't that much higher than before because she was no longer spending money like she had before. And for the most part, her new costs were pretty much covered by her small pension and social security. I don't recall the actual numbers but I don't think she dug very deep into her savings accounts and she didn't have to sell her home. Son inherited it.

Case number two was another widow and she had a investment portfolio about $1.2 million I vaguely recall. She collected social security and a very small pension from her husband. She ended up in memory care SNF and lived for probably over 5 years. Her daughter sold her home so that added maybe $200,00 to her investment account. That account was bigger than it was when her LTC started and daughter inherited a nice sum.

So there you go, two real life cases. The lesson here is that your expenses go down once you become a LTC ward because you're not out running around spending money for vacations, clothes, giving money to deadbeat adult children and relatives, making charitable donations, etc. etc. So what I learned from these two elderly ladies is that their marginal cost of being in LTC-land wasn't that significantly more than what they were spending before. This is important and should be understood.

And this thing about losing your home, there comes a point in time when the home has to go anyway and Momma or Daddy no longer has the gumption to take care of it.

the big difference is a snf here is 120k to 140k a year not 36k .

that could require a whole different line of planning .


heck , i could cover 36k a year just by the fact my wife couldn't shop on line , ha ha ha . in fact they stole her credit card but i am not reporting it stolen , the bills are actually less .
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Old 01-01-2016, 06:21 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,966,631 times
Reputation: 6718
Quote:
Originally Posted by mathjak107 View Post
...all that would have happened was these policies would have been shifted to a healthy insurer and carried on even if it was the insurance end that failed which it wasn't...
That happens sometimes when insurance company goes under. Sometimes it doesn't. Depends on whether another carrier wants to assume the "book of business" - voluntarily. There is no way an insurance commissioner or guaranty association can force another company to do so.

Quote:
...as advisor perspective said :

AIG and the financial crisis

AIG stands out as the poster child for making advisors and the public nervous about insurance companies. This was the AAA-rated company that, almost overnight, found itself in need of a $182 billion bailout from the Federal government. The natural question for prospective annuity investors to ask is, "What would have happened to AIG annuity owners if the Federal government had not stepped in?"

AIG was (and remains) a diversified financial conglomerate, and the huge losses from credit default swaps were concentrated in its financial products division. The insurance subsidiaries of AIG that sold annuities remained reasonably healthy during the crisis. The losses befell a separate legal entity, which means that creditors seeking restitution for credit default swap losses could not have laid claim to insurance subsidiary assets. If AIG had tried to move assets out of the insurance subsidiaries, insurance commissioners in the various states would have blocked such attempts. So while AIG set off huge alarms in the financial system, it was not a crisis for their basic life insurance and annuity business.
Some insurance companies are spinning off their LTC insurance arms in various ways. For example:

Insurer Casts Off Long-Term-Care Policies - WSJ

It is really impossible to know what various insurance commissioners might do in the future with regard to any insurance company that tries to do any particular thing. And - not all situations are cut and dry. Some wind up in years of litigation "after the fact".

Artemis Cleared In Calif.'s $4B Executive Life Fraud Suit - Law360

FWIW - when I was lawyering - I was involved in some collateral issues regarding the Executive Life failure. It was pretty interesting legal work - but not much fun for policy holders.

My best advice for anyone with any kind of insurance policy/product (whether it's a long term care policy or an auto policy or anything in between) is to stay on top of the financial conditions of the companies whose products you own (and - of course - to do some "due diligence" before buying a policy from any particular company). So you can take any possible appropriate actions if a company seems to be in trouble. This is especially true if an insurance policy provides more coverage than your state guaranty fund would provide if a company went under. Robyn
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Old 01-01-2016, 06:25 AM
 
71,981 posts, read 72,020,102 times
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time will tell , but right now i want the perks more then the insurance part.

actually in new your all insurers in life and annuity products must agree when asked by the state commision to absorb the customer base of a failing company as part of the right to do business here.

not sure about ltc company's but dollars to donuts says the insurance commission would have the client base absorbed by another company .

i just went through my health insurer going belly up in november . the 2nd largest health insurer in ny , ny health republic failed.. we were simply rolled in to oxford . we were now bound by oxfords terms and network of doctors but that was about it . even existing unpaid claims were no issue for us .

premiium increases are a far far greater worry then any insurer failing and you getting burned . it is very very rare .

Last edited by mathjak107; 01-01-2016 at 06:43 AM..
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Old 01-01-2016, 06:44 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,966,631 times
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Quote:
Originally Posted by JIMANDTHOM View Post
Sort of yes and sort of no. Level 1 is the Assisted level. Level 2 is predominately dementia residents and/or those with flight risk, as it is a secured area. Little momma can't perform any of the ADLS without significant assistance and qualified. Last year she was still able to do tasks, albeit with some assistance and did not meet the needs level. Sadly she did this year.

Skilled nursing is done in Level 3, but don't know what the rates are tho.

The facility my dad was in was approx. 4300/mo for assisted and about 5000/mo for the dementia side. They did not have SNF there, but this goes back to 2011.

If she lives as long as her dad did, little momma is going to be getting her monies worth.
Where I live - "Level 3" would indicate a level of care in an ALF - and wouldn't have anything to do with SNF care. I'm sure that labeling conventions vary from area to area. But - the most important thing is that ALFs are different than SNFs. They're licensed under different laws (the exact laws probably vary from state to state) - and are/aren't allowed to do various things when it comes to residents.

Many facilities have more than one type of operation under a single roof - or at a single campus. For example - my late FIL's place had both a SNF and independent living apartments. The place where my father lives now has independent living and an ALF. Some places - especially CCRCs - will have independent living - an ALF - and a SNF. It's best to get all of this straight when looking at places.

ALFs are in general less expensive than SNFs. Although the highest levels of ALF care may cost almost as much if not more than SNF care. It really depends on where you live - and the nature of the facility (some places are more "posh" than others). A new ALF opened down the road from us. It's pretty nice looking. And its highest level of care in one of the larger accommodations will cost more than a semi-private room in one of the dumpy local SNFs (not all places here are dumps but some are).

Overall - costs tend to correlate with the general cost of living in a particular area. We live in a medium priced area - and our costs are medium. On the other hand - costs in a place like San Francisco are through the roof (I've read that a nice SNF there can cost close to $200k/year these days). Robyn
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Old 01-01-2016, 11:00 AM
 
14,510 posts, read 17,411,343 times
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Quote:
Originally Posted by mathjak107 View Post
GETTING LTC REQUIRES A CAREFUL SCREENING PROCESS THAT FOR US INCLUDED BOTH EXTENSIVE BLOOD TESTING , AIDS TEST AND DRUG TESTING AS WELL AS A BUNCH OF MEMORY TESTS .
Admittedly, it has been about 15 years since I signed up for a LTC policy, but none of that was required by my insurance company.
All I had to do was to have my regular M.D. fill in some basic health information on a form, including height, weight, blood pressure, medication info, and immunization history, and then return that form to the insurance company.

Has it become that much more complex since then?


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Old 01-01-2016, 11:08 AM
 
71,981 posts, read 72,020,102 times
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they put us under a microscope . we each were given two types of memory testing too . i was 62 and wife 64
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Old 01-01-2016, 11:41 AM
 
Location: SoCal
13,396 posts, read 6,404,610 times
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I bought LTC because I didn't have to fill out anything regarding health and memory issue, and it was relatively cheap when I was working, plus in the past, some investments I thought would turn out well didn't and the ones I didn't think too much off did well. I was merely hedging my bet, just in case I'm wrong. You never know. My investment income/dividend and SS will cover long term care, even the most expensive one, without selling any asset. I just want to make sure I document my thought and strategy before I lose my mind, I don't want my kids to start selling off assets willy billy.
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Old 01-01-2016, 12:14 PM
 
14,510 posts, read 17,411,343 times
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Quote:
Originally Posted by mathjak107 View Post
they put us under a microscope . we each were given two types of memory testing too . i was 62 and wife 64

I think that I was 52 when I took out my policy.
I wonder if the differences between the requirements of my insurance company and yours were due to our age differences, or if they were due to differing company procedures.

My policy is with Washington National.
Which company provides your LTC coverage?


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