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"I'm a big believer in Long Term Care insurance, especially for couples too affluent for Medicaid"

| April 21, 2016
Retirement Protection

"I’m a big believer in LTCI, especially for couples, who – too affluent for Medicaid — want to shield their mates from the potentially huge costs of care. My late husband couldn’t qualify for coverage, due to a pre-existing condition. In the last year of his life, his bills for care at home exceeded $100,000. When I remarried, I barely glanced at my new husband’s bank balance. What mattered was whether he could get LTCI. He could and did, which sealed the deal. Priorities change, as life rolls on."  Jane Bryant Quinn

Some "Hybrid" LTCi Products Might Have Guaranteed Premiums and Benefits

The post referenced from Jane Bryant Quinn was actually part of a broader subject about LTCi.  Jane is a quant with a lot of attention to detail, so I don't need to repeat everything she says.  And she left out one key point -- my headline above.

"Traditional" LTCi is like auto insurance.  Use it or lose it.  It usually has no residual capital value.  The hybrids might have some combination of the following:

  1. Guaranteed Premium (can't be raised after the policy is issued.)
  2. Guaranteed Long Term Care benefit (that can't be reduced after policy issue)
  3. Cash Value (sometimes)
  4. Death Benefit (often)

Per dollar of premium, this kind of hybrid has dramatically less Long Term Care benefit.  That's why the carriers can afford the other benefits listed above.  But traditional LTCi is like other health insurance -- no guarantee that the premium won't rise.  In fact, it's nearly guaranteed the premium will rise.

Also please note that Long Term Care mostly will be a state-specific issue.  I'm an amateur when it comes to Public Policy.  I've never held elective office.  I have not worked for any level of government or held any type of public policy oriented position.  (As an O-1 and O-2 in my active military service, I was not at the policy-making level.)

But I nonetheless have strong feelings.  When a couple has very unbalanced resources and the one with the resources needs care, the other partner / spouse probably will suffer financially ... maybe very significantly.  Different states are handling this problem in different ways.  And the playing field keeps changing.  

It has also become more difficult to cover a lot of this risk.  I personally own "traditional" LTCi ... but with a lifetime benefit (and COLA.)  That's a terrific deal that came ... and went.  No carrier sells that any longer, to my knowledge.  If you find one that does, please let me know.  And grab it before it goes away!

In the meantime, be aware if you are in the group that is at risk.  You need to medically qualify to purchase LTCi.  If you don't qualify medically ... meaning you and / or your partner face an even greater risk, I encourage you to consult an attorney in your state of residence that specializes in the other choices ... none of which are pleasant ... but some of which might help.

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