Long Term Care insurance

I have a long term care insurance policy that I’ve been paying about $837/quarter for the premium. I just received a notice of premium increase to $985/quarter. The company has provided me 3 options:

  1. Just pay the increased premium and maintain the same benefit level
  2. Reduce my benefits and reduce the premium, but does not say the premium will remain the same as it was though.
    3.Reduced contingent non-forfeiture benefit. In this case, if I understand, I will pay no further premiums and I receive a benefit that keeps the same nursing home payment but the lifetime benefit is limited to the total amount of premiums I’ve paid or 30 times the daily nursing home benefit. It doesn’t seem to say which.

If I don’t pay the increased premium they’ll apply option 3 automatically. I’ve got about 1.2M in my IRA account, a paid off house worth around $900,000, social security benefit of about $3500/mo. and two pensions worth about $3800/mo. Besides that I’ve got about $200,000 in cash and some stocks worth another $150,000. This rate increase has me wondering if I really need the LTC insurance and maybe should just take option 3?
I wonder what Clark’s advice would be here?


It looks like you are in excellent shape to self-pay for any future long term care needs using the income from your holdings. Using the 4% withdrawal guideline for your portfolio figures and excluding your house, you could have an annual income of over $150,00 before income taxes (and before capital gains taxes for the stocks that presumably are in a brokerage account).
Social security $48,000/year, Pensions $45,600/year, IRA 1.2 million = $48,000/year, Cash 200,000 = $8,000/year and Stocks 150,000 = $6,000/year

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Thanks. My thinking has been along the same lines. I appreciate the sanity check.

Having dealt with assisted living and nursing home costs for several family members I have come to look at it more simplistically. I don’t know the terms of your contract but lets say it $150 a day. The increase for this year would essentially pay for itself with 4 days of care. At the last increase (every 5 yrs) in my contract I added up all my payments for the insurance. It was eye opening to see how little assisted living care, let alone nursing home care, that cash would buy. Even with the most recent rate increase my yearly premium equates to roughly only one month of care so, to me, worth the insurance even though I could likely self insure.

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Yes, if you feel you need it want the coverage pay the increase. It’s really not that much. But, also get with a financial advisor or insurance consultant to be sure you are getting a good policy and deal. Insurance is a complicated issue with many nuances and you’ll find many sales people know more about sales than they do about the product they are selling. Insurance is all about having Peace of Mind, and that includes peace about the product, who’s selling it and the company you are buying from. If price is your primary factor, one day you’ll be sorely disappointed. Get educated and then look for the best deal. If you are already at that point, I’d pay the increase.

I agree with your thinking, WJB. Take option 3. It will eliminate the yearly stress of wondering how much my LTC insurance will increase this year. My wife and I went through that stress for years, as our premiums went up and up and then increased even faster the closer we got to needing it. It seems to be a giant scam and rip-off, over which the consumer has no control. If your premium increases (the year before you need the insurance) to an amount you can’t pay, then what is this insurance really worth? Zero! There is absolutely NOTHING to stop that happening. It is NOT something you can depend on being there when you really need it. The sooner you get out, the happier you will be. Maybe someday there will be some better options. We canceled and got nothing for our years of payments, except peace of mind. The bottom line is that LTC insurance is only as trustworthy and dependable as the profit-centered company that issued it. They care NOTHING about your future. Only you care about that, so you have to take that responsibility and risk on your own shoulders. There are no true safety nets in this case.