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Other than that, there hasn’t been an increase. Of course, it may double next year or may stay the same. I have no idea which.
The issue I have (and I knew this could happen when I bought the policy) is that you can pay $11,000 per year (in your case) and then possibly be charged $30,000 the following year. If you drop the policy once the price goes up to $30,000 you’ve more or less wasted the $11,000 you paid this year. That uncertainty of sizable possible future increases (based on large historical increases) made me throw in the towel.
I agree with you, but not sure how one would estimate/guess what will happen to the rates beyond the current year. We got the shock increase 4-5 years ago. Had a similar reaction but persisted. It has not gone up - but insurance offered to increase our daily max (we have no inflation protection built in) for an additional premium. We took them up on it. We pay about 5.5K per year (per person). Other than that, there hasn’t been an increase. Of course, it may double next year or may stay the same. I have no idea which.
i look at it this way ,
as we age our chances of being in a car accident actually increases as we age .
for the amount of actual miles driven , seniors tend to have more accidents.
but even though i am not old enough yet to be in that sweet spot , my insurance is covering us every year .
i had a 55 year old co worker fall off a ladder painting and break his wrist and hip .
during hip surgery he had a stroke which left him paralyzed.
he was in a skilled nursing facility and financially crushed his family .
so i consider what i pay for my LTC insurance not for the future but for each year that i am covered now
The issue I have (and I knew this could happen when I bought the policy) is that you can pay $11,000 per year (in your case) and then possibly be charged $30,000 the following year. If you drop the policy once the price goes up to $30,000 you’ve more or less wasted the $11,000 you paid this year. That uncertainty of sizable possible future increases (based on large historical increases) made me throw in the towel.
We are all finding our ways through this maze. The rationale you offered occurred to us as well. And, it may still come true in the coming years. However, how we reasoned is that this is a regulated market, however weak the regulators are. So, the insurance company has to justify the rate increases to a third party who is supposed to watch out for the insureds. The large increases that we have witnessed were to bring rates in line with the payoffs. Once they are in aligned, the insurance company cannot just raise the rates on existing policies arbitrarily. They might, but it is not supposed to happen. Weak as that might seem, we based our decision on that. So far, it has held and the rates have held since the increase.
We also take the attitude that the we pay the premium in any given year for two things: (1) LTC for that year, and (2) for the option to maintain the policy for the future years. In early years (as we hope our early 60s are), (2) is a greater consideration. Our policy is has fairly substantial cover - $430/day max with 10 years of coverage (policy max of about 1.6M). From what I have seen, it is hard to find such a policy these days and the max cover being offered is smaller, without a much smaller premium. So, the option is worth something.
Like I said, our financial advisor doesn’t even think that we should maintain it as we can comfortably self-insure - but we see it as a hedge against unforeseen scenarios with our retirement portfolio and are planning to maintain it (so far).
as we age our chances of being in a car accident actually increases as we age .
for the amount of actual miles driven , seniors tend to have more accidents.
but even though i am not old enough yet to be in that sweet spot , my insurance is covering us every year .
i had a 55 year old co worker fall off a ladder painting and break his wrist and hip .
during hip surgery he had a stroke which left him paralyzed.
he was in a skilled nursing facility and financially crushed his family .
so i consider what i pay for my LTC insurance not for the future but for each year that i am covered now
I agree. I too see the premium as coverage for the year. There is the aspect of option to keep the coverage in the future years that I wrote about in the previous post.
We are all finding our ways through this maze. The rationale you offered occurred to us as well. And, it may still come true in the coming years. However, how we reasoned is that this is a regulated market, however weak the regulators are. So, the insurance company has to justify the rate increases to a third party who is supposed to watch out for the insureds. The large increases that we have witnessed were to bring rates in line with the payoffs. Once they are in aligned, the insurance company cannot just raise the rates on existing policies arbitrarily. They might, but it is not supposed to happen. Weak as that might seem, we based our decision on that. So far, it has held and the rates have held since the increase.
We also take the attitude that the we pay the premium in any given year for two things: (1) LTC for that year, and (2) for the option to maintain the policy for the future years. In early years (as we hope our early 60s are), (2) is a greater consideration. Our policy is has fairly substantial cover - $430/day max with 10 years of coverage (policy max of about 1.6M). From what I have seen, it is hard to find such a policy these days and the max cover being offered is smaller, without a much smaller premium. So, the option is worth something.
Like I said, our financial advisor doesn’t even think that we should maintain it as we can comfortably self-insure - but we see it as a hedge against unforeseen scenarios with our retirement portfolio and are planning to maintain it (so far).
Everything you say makes sense. We are almost exactly in the same place you are---age, ability to self insure. Even the policy we had, had terms that were close to what you described above. I agree your policy is worthwhile. I would have preferred to keep ours as I am pretty risk adverse, but for us, the cost and uncertainty about future rates got to be too much. Hopefully, the end for both of us is a long way off, but when it happens, it will be quick.
Another thing to consider is that the older you and your spouse are, the less likely that either of you will spend a LOOONG time in a nursing home. When you're both in your early 60's, then it's quite possible that one or both of you could spend many years in a nursing home. But when you get to your late 70's (or older), it's likely that a nursing home stay won't be very long, especially for men since men don't tend to last long in those circumstances.
So, if you have fairly substantial financial resources and are approaching the age of 80, and the LTC insurance company is raising your rates out of sight, you might just consider telling them to "stick it where the sun doesn't shine". You can self-insure from that point on.
Yes, I know, some people go into a nursing home at age 90 and stay for several years, but the odds of that happening to any one individual are very slim. I've already decided that I want NO LTCI for ME. I bought a policy for only my wife. She might last a long time in that setting, but I know that I wouldn't.
Another thing to consider is that the older you and your spouse are, the less likely that either of you will spend a LOOONG time in a nursing home. When you're both in your early 60's, then it's quite possible that one or both of you could spend many years in a nursing home. But when you get to your late 70's (or older), it's likely that a nursing home stay won't be very long, especially for men since men don't tend to last long in those circumstances.
So, if you have fairly substantial financial resources and are approaching the age of 80, and the LTC insurance company is raising your rates out of sight, you might just consider telling them to "stick it where the sun doesn't shine". You can self-insure from that point on.
Yes, I know, some people go into a nursing home at age 90 and stay for several years, but the odds of that happening to any one individual are very slim. I've already decided that I want NO LTCI for ME. I bought a policy for only my wife. She might last a long time in that setting, but I know that I wouldn't.
5 years devastated my dads 2nd wife financially when he needed care ..that’s all it took.
our estate attorney can tell you all about his self insurers
really self insuring is tremendously costly.
it means pulling a huge chunk of dough out of the income generation pool. severely cutting income because you need to segregate it and invest it conservatively like an insurance company would
most do none of that and are just saying i am self insuring and do nothing of the sort
our attorneys biggest GROUP OF clients are these self insurers .
now that huge chunks of money are no longer available for income generation the lifestyle they built can’t be supported for long.
the stay at home spouse goes into panic mode.
our last resort would be to self insure but we would have to self insure properly like an insurance company so that money is always there intact.
that will be a big income hit. we were going to self insure originally but these premiums are cheaper then the income hit is.
you cannot leave the money you are self insuring with in the income generating pool of money .
a safe withdrawal rate assumes that money can be spent totally down under worst case outcomes. so the insurance money cannot be part of that pool generating income .
that is very costly .
this is a big point the self insurers miss and really what they are doing to self insure is NOTHING …other then to say i will self insure
Last edited by mathjak107; 12-16-2023 at 03:54 PM..
5 years devastated my dads 2nd wife financially when he needed care ..that’s all it took.
our estate attorney can tell you all about his self insurers
really self insuring is tremendously costly.
it means pulling a huge chunk of dough out of the income generation pool. severely cutting income because you need to segregate it and invest it conservatively like an insurance company would
most do none of that and are just saying i am self insuring and do nothing of the sort
our attorneys biggest GROUP OF clients are these self insurers .
now that huge chunks of money are no longer available for income generation the lifestyle they built can’t be supported for long.
the stay at home spouse goes into panic mode.
our last resort would be to self insure but we would have to self insure properly like an insurance company so that money is always there intact.
that will be a big income hit. we were going to self insure originally but these premiums are cheaper then the income hit is.
you cannot leave the money you are self insuring with in the income generating pool of money .
a safe withdrawal rate assumes that money can be spent totally down under worst case outcomes
18 years ago we planned on self insuring ..l like everyone else , was just just saying it but never really had a plan for doing so .
then we were asked to do a feature story with money magazine…money magazine thought it would be interesting to take a do it yourselfer who did their own investing and planning and put them against their team of pros .
we did well against them , except for the self insuring …
they showed us all the math to really self insuring and it was so costly to do it properly that just a small part of the yearly gains on the money in the income generation pool paid the premiums for a real policy
so they were right and i was wrong about my assumptions
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