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Like all insurance companies, their main objective is to keep their money. There are SO MANY caveats to each claim. Plus, most have a 6 month waiting period before they'll begin payment. Many elderly folks die within 6 months of moving to a care facility.
So, to wrap up. NO, do not buy LTC insurance.
We contacted one of the national home care agencies and they handled it for us. This particular home care company processes thousands of long-term care insurance claims every year. All we had to do was sign a couple of HIPAA forms and they took care of the rest. The claim was approved within 3 weeks.
They handled the claim for free because they wanted my relative to use their agency for her care.
It makes sense. The home care agencies get paid by the long-term care insurance companies. They have a financial incentive to set up a system to successfully and quickly process long-term care insurance claims.
I have also done assessments for long term care and the slightest thing can get a refusal, plus I have also looked after patients who really needed the benefits and the insurers dragged their feet and the patient died without any help.
In my opinion it is a very two edged sword especially as we don't know now what will happen to medicare and medicaid. There is also the problem of many poliies being limited for number of years they will pay.
You all need to know that if you have planned on your long term care to pay for your needs in 30 years, withno plan B , then you are taking a big risk!
The insurance landscape will have changed, as will the different types of facilities available. Care offered in 30 years from now, will most likely be very different ,with different licensing from today. These differences greatly affect your ability to collect on a claim.
Collecting on any insurance policy is never certain. Long term care is no different.
LT companies prefer to pay the Home Care benefit as it a smaller payout. Moving to the next level, Assisted Living , can be difficult as many policies claim to be " Nursing Home" only, when in fact, the contract verbiage covers Assisted Living.
Policies purchased now will also have issues, as no one can foresee the future.
She is never going in to care. Brother will NOT ALLOW IT. She's with him until she dies. The mtg simply established what the rest of us sibs needed to know--was there really any money there for her care. Answer, no.
At least 50% of the seniors in the United States should NOT own long-term care insurance because they can qualify for Medicaid. Your mother is one of them. She doesn't need long-term care insurance, she has Medicaid. Today, when someone buys long-term care insurance, there's a form they have to complete regarding their income and assets. The form is designed to prevent people from buying long-term care insurance if they can easily qualify for Medicaid. It's a very important form and it's been required in most states since the late 90's. If that form had been required 23 years ago, in your mother's state, the insurance company would not have issued her a policy.
A Life/LTC "hybrid" policy is usually a great choice for someone who buys it in their forties (maybe early 50's). They are usually not a good value for someone older than that. Be careful because not all hybrids have guaranteed premiums or benefits. Don't judge the policy by the "projected values". Judge the policy by the guaranteed values. Also, keep in mind that most hybrid policies do not have any inflation protection.
Thanks for making the distinction between projected values and guaranteed values. I'm curious about why you say they're not a good value for someone in their 50s or older. Can you point me to a resource or provide more information?
I was thinking it could be a good thing to purchase around age 60 when you have a good idea of what your available retirement funds will be.
The insurance companies love it when people buy these single-premium hybrids.
1) They earn money on your money for a very long time. The investment return on your deposit is usually less than zero. When you look at the guaranteed surrender value, if you cancel the policy you usually get back less than what you put in.
2) When you need care, they use your money first. If, for example, the single-premium is $100,000, they’ll use that money to pay for your care FIRST before they use their own money. If the single-premium is $100,000, essentially you’re buying a long-term care policy with a $100,000 deductible.
3) When you need care, you'll have to use even more of your own money.
A $100,000 single-premium “hybrid” policy will probably pay less than $4,000 for each month that you need long-term care. From the very first month you need long-term care you’ll have to use your own money in addition to the $4,000 the insurer gives back to you each month. Most “hybrid” policies have no inflation protection. Twenty years from now, if care is costing $12,000 per month, you’ll have to pay $8,000 per month from your own money to make up the difference.
I do this type of analysis for my clients every day. 99 times out of 100 these single-premium products are a bad deal for the consumer and a great deal for the insurer.
That's a real eye-opener. Thank you.
Your concerns about rate increases would be valid if long-term care insurance companies were allowed to price their new policies, available for sale now, the same way they priced their policies 10 to 20 years ago.
Fortunately, insurance regulators do NOT allow any policy purchased today to use the old pricing assumptions. To protect consumers purchasing LTC policies today, 41 states have passed strict pricing regulations. The new regulation has helped curb long-term care insurance rate increases because it forces long-term care insurance companies to lower their profits if they seek a rate increase. Even if a rate increase is approved, due to this new regulation, the result to the insurance company is less profits. Which insurance company wants to lower their profits?
Now that’s good news and that’s bad news. The bad news is that a policy purchased today costs more than a similar policy that was purchased 10 years ago.
The good news is that since today’s policies are priced more conservatively they are less likely to have a large premium increase in your lifetime.
I don't have the skills to work out comparisons but if I was single woman with no children I would feel my best course would be to set up an account as early as possible and keep it for this purpose only.