The value of kids - when parents grow old.

[ExGingi]

https://www.fool.com/retirement/2018/09/02/5-long-term-care-stats-that-will-blow-you-away.aspx

4. The number of insurers offering stand-alone long-term care policies has fallen from 125 to 15
According to a report by the NAIC, the number of insurers offering stand-alone long-term care policies (as opposed to ones bundled with some other product(s) such as annuities) dropped from 125 to 15 between 2000 and 2014. That will only surprise those who haven't been keeping up with the industry, which has been struggling.

What's the problem? Well, as noted in the previous statistic, long-term care is simply very costly, and healthcare costs in general are quite steep -- they have been increasing at rapid rates, too. Some insurers have had to hike the premiums they charge their policy holders, while others have just stopped offering long-term care policies. Genworth Financial, for example, recently announced a 58% rate hike, while Mass Mutual requested a 77% rate hike.

This information shouldn't necessarily stop you from seeking coverage, but do know that the industry has been in some turmoil, and approach it with your eyes open.

[ADG]

When would you lose the death benefit?

The bottom line is that insurance is meant to protect you (your wealth) from eroding factors, and not as a windfall.

If you have a combined Life/LTC policy, and G-d forbid experience an event that could trigger LTC benefits, your options would be to pay for the expenses from current after tax income and assets (though if you exceed the threshold you could get a tax deduction on the expenses) or to pay for it from policy benefits (which were purchased at a discount). Either way you would be using up assets, the only difference would be what way is more efficient.

I have looked at a few LTC riders and those that offer it offer to pay it out now at a very low %. So you are essentially forfeiting 30-60% of Death Benefit if you use the rider. How is that more efficient?
 

[ExGingi]

I have looked at a few LTC riders and those that offer it offer to pay it out now at a very low %. So you are essentially forfeiting 30-60% of Death Benefit if you use the rider. How is that more efficient?

How are you forfeiting 30%-60% of the death benefit if you use the rider?

As I've written upthread:

When would you lose the death benefit?

The bottom line is that insurance is meant to protect you (your wealth) from eroding factors, and not as a windfall.

If you have a combined Life/LTC policy, and G-d forbid experience an event that could trigger LTC benefits, your options would be to pay for the expenses from current after tax income and assets (though if you exceed the threshold you could get a tax deduction on the expenses) or to pay for it from policy benefits (which were purchased at a discount). Either way you would be using up assets, the only difference would be what way is more efficient.

When evaluating whether an LTC rider on a life policy makes sense, you have to weigh it against the alternatives. It is also to be noted that not all LTC riders are created equal, some could potentially result in unwanted taxable payout. It's important to talk to someone that actually knows/understands the differences and can educate you.

[mercaz1]

a major benefit to the LTC rider on a life policy is that you are certain to get a benefit- whether it is a death benefit or long term care benefit- ppl like having this option because they can't afford 2 separate policies and/or they like the fact that the no matter what they get something for their premiums

[ExGingi]

I actually just did a 1035 exchange on an old life insurance policy that I bought for my son years ago, and figured I'd add a Long Term Care rider on the new policy. I wonder if he's the youngest ever to get that rider, the cost for it is extremely low.

[ExGingi]

The URL is different than the article headline, which is where I got the name for the thread.

https://www.bloomberg.com/news/articles/2017-08-28/this-is-the-best-long-term-care-insurance

I see that the original link is no longer publicly available, it is still available through the internet archive https://web.archive.org/web/20170828223635/https://www.bloomberg.com/news/articles/2017-08-28/this-is-the-best-long-term-care-insurance

[ADG]

Correct me if I am wrong. The rider allows you use the death benefit to cover LTC (i.e tap into the funds earlier). All the companies I have seen offer this, will make you forfeit a percentage of the DB to tap into it for the LTC.  If you know of a company that doesnt do this, please let me know.

[ExGingi]

Correct me if I am wrong. The rider allows you use the death benefit to cover LTC (i.e tap into the funds earlier). All the companies I have seen offer this, will make you forfeit a percentage of the DB to tap into it for the LTC.  If you know of a company that doesnt do this, please let me know.

The point of the rider is to allow you to use the death benefit either as a death benefit or a long term care benefit. So what are you forfeiting? You're using it during lifetime (hopefully on a tax free basis)!

[ADG]

The point of the rider is to allow you to use the death benefit either as a death benefit or a long term care benefit. So what are you forfeiting? You're using it during lifetime (hopefully on a tax free basis)!

They do not give you 100% they penalize you to take 60% of the DB without giving the other part ever.

[ExGingi]

They do not give you 100% they penalize you to take 60% of the DB without giving the other part ever.

Where do you get that information from?

Get your facts right.

[ADG]

Where do you get that information from?

Get your facts right.

Ill admit I dont remember the name of the company or the exact percentage but I remember that is was substantial. Essentailly squeezing the policy owner to take less now. But please, do tell which company will offer 100% for a LTC?

[ExGingi]

Ill admit I dont remember the name of the company or the exact percentage but I remember that is was substantial. Essentailly squeezing the policy owner to take less now. But please, do tell which company will offer 100% for a LTC?

It's not about offering 100% for LTC, it's about getting dollar for dollar reduction of the death benefit if used for LTC.  You can get a $3,000,000 Whole Life policy and select how much of that (up to a certain maximum) would be available for LTC.  That amount could be as low as $90,000 (IINM) or as high as $2,500,000 (not in every state).

What you might be referring to is Guardian's EABR rider, which ISN'T a long-term-care rider, but rather a NO-COST rider that allows one to take LOANS in excess of the cash value in case of a long-term-care situation.

Guardian's also has a true LTC rider that isn't free and allows up to 90% of the death benefit to be used for Long-Term Care (with the balance remaining as a death benefit, in case LTC pool was exhausted). NYL has a Chronic Care Rider that IINM allows up to 99% of the Death Benefit to be used for LTC.  NYL also has an Asset Preserver product in which the LTC benefit can exceed the policy initial face amount, and still leave a residual death benefit. MassMutual has a LTC rider that allows up to 90% of the death benefit to be used for LTC (leaving at least 10% residual death benefit). Just to name a few of the big players.

MassMutual and NYL are two of the few companies out there that still offer standalone LTC insurance, but IINM only available through their captive agents, not through the brokerage channel.

The drawback of LTC riders on Whole Life policies is that there's no inflation protection. It should be part of an overall plan.

[ChaimMoskowitz]

Do all policies have this option or do you need to convert your current policy to one that does have it?

[ExGingi]

Do all policies have this option or do you need to convert your current policy to one that does have it?

These riders are relatively new, so older policies won't have them. And they are generally only available on newly issued policies (including term policies that are converted to Whole Life, but would be subject to underwriting for the rider).

NYL had a limited time windows (that ended on Friday) for adding a Chronic Care Rider onto certain inforce policies.

[ChaimMoskowitz]

These riders are relatively new, so older policies won't have them. And they are generally only available on newly issued policies (including term policies that are converted to Whole Life, but would be subject to underwriting for the rider).

NYL had a limited time windows (that ended on Friday) for adding a Chronic Care Rider onto certain inforce policies.

Thanks, mine is 30+ year old WL. Same with DW.

[ExGingi]

Thanks, mine is 30+ year old WL. Same with DW.

Only one each?

In any event, this shouldn't be weighed in a vacuum, but rather as a piece of the big puzzle.

[ChaimMoskowitz]

Only one each?

Yes. People have more than one? We both had company term policies but no longer.

[ExGingi]

https://www.bloomberg.com/news/articles/2018-11-28/ge-s-money-pit-how-a-15-billion-hole-could-get-costlier-to-fix?srnd=premium

[ExGingi]

News coming from Israel that the largest reinsurer of LTC policies (a French reinsurer) is exiting the market.

Financial repression along with longer life expectancy are making pure LTC policies a non viable business.

[CountValentine]

News coming from Israel that the largest reinsurer of LTC policies (a French reinsurer) is exiting the market.

Financial repression along with longer life expectancy are making pure LTC policies a non viable business.

Any good ones out there?