My mother in law had a Facility Only policy that only paid $1500 a month. Facility only. Basically worthless, right Arthur? Yes,you saw that number correctly. She had about $200,000 in assets. She had Alzheimer's for 7 years.

We used the $200,000 to pay for four years of home care. Then, because of her condition, she had to go to a facility.

Her total income was $1200 a month. The cost of assisted living was $2700 a month. She had a $1500 a month shortfall, but the toilet bound measly little no good $1,500 a month LTCI policy made all the difference for us. Between the $1200 in income, and the $1500 LTCI benefit, she was able to go to Assisted Living, not a Medicaid Nursing Home, and had enough LTCI insurance to make the difference between her income and her cost.

When she died after three years in the ALF, she left her three children about $12,000 apiece. My wife paid her car off with it. She said her Mom would be so happy to know that.

Medicaid never entered the picture. Not everyone plans on getting on Medicaid one day. I have a measly pitiful $3000 benefit with inflation rider on my wife and myself. Not a policy you would recommend I'm sure. But in our situation, that's enough to make all the difference in a $5000-$6000 a month cost of care wiping us out, and hopefully we will not ever have to consider Medicaid.

Maybe it's because I live in Mississippi, but I think our Math works different here. Because what I just described makes sense to me, and I feel sure it doesn't to you.

Am I still clear as mud to you Arthur?

BINGO!

Scott,
You're absolutely correct.......
(Did I say Scott was absolutely correct????)

LTC is NOT right for everyone and in the case I stated, I think we can agree (maybe not Bill) that a LTC policy was not right for her.

Yes, it's easy to be a Monday morning quarterback and look at the facts AFTER a LTC event. However, in the NY metro area, where nursing homes are running $10,000 to $15,000/month and ALF are running about half that amount, a policy may not be appropriate for someone with $200,000 and an income of $40,000.

It does not mean it was not the right thing for your relative Scott.

Home care is another problem for someone with a $3,000 monthly benefit. If care were required for 10 hours a day, at $20/hour, that's $200/day or $6,000/month.

So, in the same case, that lady who has a $3,333 monthly income would have to use $3,000 of that to co-pay each month. Kind of tough to pay rent, buy food and purchase necessities with only $333 a month in net income.

Now, I made up that entire story.............
I don't know a specific person in the scenario that I described. But, I know she exists and it proves my point.

However, in my career I have met a number of prospects over the years where I felt (I knew) that the purchase of a policy was just not the right thing to do. And, in cases like that, I have no problem walking away from the kitchen table.

Unlike other agents, for LTCi I have never done any type of big-deal financial work-ups or fact-finders on a prospect. I keep it simple and I'm only interested in 2 things:
1) Do they have enough in the way of income to comfortably afford the premiums, and....
2) Do they have enough in the way of assets to protect?
Those 2 questions will give me just about everything I need to know about whether a policy is appropriate or not.

Case closed or it is still open to debate?

Have a good holiday weekend everyone.
Arthur

Bill,
I never said that a minimal policy was not appropriate in an area where there were minimal costs. That's a benefit conversation, not a "Something is better than nothing" conversation.

Is $1,500 or $3,000/month the right benefit in an area where a nursing home is $50,000/year and an ALF was $30,000/year. It is only if there's enough in the way of income & assets to compliment the policy's benefits.

Those benefits may be right for you and your family, BUT they are not right for someone living in an area where a nursing home is $130,000/year.

All I was implying was that a policy is not right for everyone, I did not mean that it's not right for all.

Arthur

ok

Arthur, I am on your side. I have never believed that something is better than nothing.
Maybe we are in the minority, but that is how I have always felt. If my clients want to do long term care planning, then let's do it right. And that means 5% compound benefit increases for everyone age 65 and under, too. Period. I don't have time to apologize to the children in 20 years beause I did not stand my ground as the advisor.

Jack Lenenberg, J.D.

Well, you might be speaking with good agents.

There are many agents I know of that do not understand the value of the 5% compound factor, and are ill-equipped analytically to figure it out. And some agents are so scared of the premium that they sell 3% compound and 5% simple to 50 year olds. Based upon actuarial numbers and corresponding insurance premiums for various inflation factors, the 5% compound factor is worth more than any other feature of your long term care policy if you are ages 61/51. The risk of your claim post age 76/66 is greater than pre-age 76/66. Massage the benefit period and/or the daily benefit up, down, and sideways. But not the 5% compound factor. Put that benefit in your safe and lock it up.

Jack Lenenberg, J.D.

Jack states:


Thank you Jack and YES, we are in the minority.

Arthur

Of course we are, my fellow Member of the Tribe.
Yiddishe kop v. Goyishe kop

.

Yup,
Both of my parents are Native American Indians, born in Tel Aviv, raised in Ireland and are presently living on the Cherokeewitz Reservation.

It's amazing what you can find on geneology.com

Arthur