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  • long term care insurance

    I'm a 42 year old pediatrician. I'm getting advice from my financial advisor about purchasing long term care insurance for the future. I'm wondering if anyone has any experience with this product and if it is something worth investing in.

  • #2
    the answer is it depends..My understanding is the insurance has lots of problems.  I really boils down to how  are you doing with your retirement savings.  If you are a good saver you probably don't need it.  Really indigent people will end up on Medicaid.  Really wealthy self pay.  Some people never go to LTC others go for short stays like rehab that Medicare will pay for.  There have been some threads on this site about this topic.  Michael Kitces at Nerds Eye View also has some posts.  Also the prices for assisted living and NH vary tremendously around the country.  I think I read that a portfolio of 3-4 million is enough to self pay.  Other factors like legacy protection are a consideration.  I have chosen not to buy it. My reading indicates that lots of people who buy it end up letting the policy lapse down the road when they jack up the premiums.

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    • #3
      There are some insurance products that provide really great bang for the buck.  Umbrella policies and term life insurance.

      Long term care insurance isn't great bang for the buck.  The financial footing is questionable and insurers can and will raise premiums.  For higher net worth individuals it probably makes more sense to self insure.

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      • #4
        Cory Fawcett talks about this in his book on retirement, and long story short most docs who have met or are anticipating meeting FI don't need LTC insurance.  They generally will have adequate funds saved up to cover it if they need it.

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        • #5
          LTC insurance is not for me. I could never trust an insurance product that is always in flux with unpredictable premium increases.

          I may take a hard look at irrevocable Medicaid Trusts some day. Though I will probably just roll the dice and self-insure.

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          • #6




            Also be careful about hybrid polices. These are permanent insurance or annuities with ltci riders. These are bad deals but get pushed with the idea that the premium won’t rise. Companies are moving more towards such policies bc it is better deal for them. A decade or so ago there were straight ltci policies with unlimited benefits but a short limited pay time period. Assuming the companies don’t go under those likely we’re decent deals. I wouldn’t be willing to buy any of the currently available products.
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            I listened to a pitch from Fidelity about this approach recently. You are buying a life insurance product with a defined dollar amount of LTC benefit. It’s a lump sum premium up front so no rising premiums that tempt you to cancel, your heirs get the life insurance benefit if it hasn’t been used up, and there is a cash value that builds if you want to terminate. I wasn’t interested because I think I can self-insure; the dollar amount of LTC benefit won’t necessarily cover costs;  I don’t need the life insurance; I only want to insure against catastrophe; and I am fortunate to have purchased a disability policy from Paul Revere that i believe is no longer sold, but which provides disability payments for life if I (and/or my spouse who also has such a policy) become disabled at or before age 65.
            My Youtube channel: https://www.youtube.com/channel/UCFF...MwBiAAKd5N8qPg

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            • #7




              There are many of them but it isnt much different than other permanent policies.  Just like other permanent policies, the build up of cash value is very poor.  Its actually typically worse than a regular permanent policy and the rider costs money.  If you use the ltc then they initially deduct that from your death benefit until its all used up so they use your money first.  Only after thats all gone are they actually using their money to pay the ltc.  The reason insurance companies are pushing these policies instead of continuing to push straight LTCi is because they make more money and transfer the risk back to you.   Money in a taxable account also gets a step up in basis at death.  Given the poor return on these policies and the fact that most likely you are just using your money to pay the ltci costs, id rather invest the money myself and get a much better return and then use the money for ltc as i see fit without having to deal with the insurance company.
              Click to expand...


              Entirely agree.
              My Youtube channel: https://www.youtube.com/channel/UCFF...MwBiAAKd5N8qPg

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