Ask Terry Questions Long Term Care Insurance rising premiums

Long Term Care Insurance rising premiums

By Terry Savage on October 20, 2018 | Insurance & Annuities

I’d love to know your thoughts and insight regarding Long Term Care Insurance (LTCI), and how that should fit into my overall plan for a secure retirement for bothy wife (age69) and I (age 70). Due to my heart condition and other reasons, I suspect that we are not good candidates for more life insurance.

We first bought LTCI several years ago (perhaps 2000?) from John Hancock, and over the years, we’ve had some premium price increases, which we’ve absorbed. Our current coverage allows for a Daily Maximum Benefit (DMB) of $305, and a Lifetime Maximum Benefit (LMB) of 5 years. Now we are being hit with another premium increase of 16%, but at the same time, John Hancock is offering some alternative options. The options involve various combinations of reducing DMB and/or LMB, in order to mitigate premium price increases.

In general, I’d like to know your thoughts and recommendations, and insight, as I consider these. Can you tell me what the going rates (ranges) are for long term care (either nursing home, or in-home care) in Northeastern Illinois, and/or Southeastern Wisconsin? And what is the usual length of time that people need coverage (if and when they do)? Other key points to factor in for consideration?

Perhaps you’ve already addressed this in some of your columns and I’ve missed it. When I do have a chance to read your columns, I always enjoy the insight and clarity that you provide. I’ve also had the opportunity to enjoy listening to you in person (at an AARP-sponsored session). You have a knack for making complex ideas understandable for many – Thank You.

I thank you in advance.

Terry Says

I guess it’s time to do an update on LTC insurance. Here’s a link to my most recent column, which was last February.

I know exactly how you feel about rising LTC premiums. The insurers certainly mispriced the premiums when the policies were sold 15-10 years ago. Back then, they figured that people would do everything possible to avoid “going to a nursing home.” But then boomers realized the policies covered assisted living facilities that were/are very attractive. So they started using their policies! That was not predicted in the pricing.

It’s tough to make a bet against yourself. But the money can really flow out quickly if you need extended care. Most people don’t use more than two years of coverage — except for those with Alzheimer’s! That’s a tough bet. And remember, you likely have a 100 day period in which you must cover the costs out of personal funds, before your policy kicks in.

As to the cost, here’s a link to the Genworth Cost of Care Survey for 2018. You can search in your area. The costs are astonishing.

I’ll tell you what I did when faced with a rising premium: I called the insurer and screamed, and then I wrote a column — and then I decided to keep paying and not alter the original coverage!

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