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Long Term Care Insurance | Not Just For Seniors | It's For You

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

Some recent statistics concerning long term care may surprise you if you are under age 65.  it's not just your parents' or grandparents' issue. It's yours.

• 40% of people who need long term care are working-age adults between 18 and 64.
• By 2025, for every 100 middle aged individuals, there will be 253 seniors.
• There is a 68% probability that an individual over age 65 will become cognitively impaired or unable to complete at least two activities of daily living-including dressing, bathing or eating over his or her lifetime.
• On the aggregate, of those who enter a nursing home, 50% will stay an average of 2.5 years; 10% will stay there five years or longer.   Source: Leimberg Elder Care Law Planning/ Carol G. Einhorn   January 14, 2013

  Cost of Long Term Care by State | Cost of Care Report | Genworth

John Darer® is a member of the American Association of Long Term Care Insurance (AALTCi) and the Society of Financial Service Professionals (SFSP) and can assist you in determining a long term care strategy. Call 203-325-8640 for more details.

Compare Cost of Long Term Care Across The United States

by John Darer CLU ChFC CSSC RSP

Genworth Financial has produced an interactive map of the United States which breaks down the median cost of long term care by type and by state. Some really eye opening stuff. You can use the website to compare the costs between different metropolitan areas within particular states.

Example

Comparing median annual cost of assisted living facility in CT, NJ, NY, AZ and FL (in dollars)

Outer NYC area  72,000

NJ  57,300

CT 53,160

NY  39,060

AZ 36,600

FL 30,600

New York Insurance Dept. Issues Important Opinion on Long Term Care Insurance

by John Darer® CLU ChFC CSSC RSP

The New York Insurance Department's Office of General Counsel has answered a question that could prove important for holders of Long Term Care Insurance policies in New York.

The question:

"Would a NY resident insured under an individual long-term care policy purchased in New York, with a maximum lifetime value of $393,000, be protected under LICGC  (of New York) if the insurer becomes insolvent either before or after the insured enters a long-term care facility?"

The answer can be found at this link  http://www.dfs.ny.gov/insurance/ogco2009/rg090413.htm

NOTICE: New York State Insurance law prohibits the use of the LICGC in the sales or solicitation of insurance.  This is not a solicitation. The above is commentary being provided expressly and solely for the education of other settlement planners, financial planners and lawyers. The above link leads to New York Insurance Department published statements and none of the material is not intended, nor may it be used by anyone in the sales or solicitation of insurance.

 

Long Term Care Insurance Company Ratings Fumble in April 2009 Financial Planning

by John Darer® CLU ChFC CSSC RSP

A fumble "at the goal line" in otherwise very good article on the financial security provided by long term care insurers in the April 2009 Financial Planning magazine (pp 48-53) leaves me scratching my head.

Donald Jay Korn observes that the cost of long term care insurance has been rising and questions whether the companies that offer it are still on solid ground and then misrepresents that out of the top long term insurance companies only John Hancock Life Insurance Company and Massachusetts Mutual Life Insurance Company get the highest grades from the three rating agencies. Korn lists A.M. Best Co., Moody's and Standard & Poors as "the three rating agencies".

Comments:

1. There are more than three rating agencies. Most notably Korn omitted Fitch.
2. While both John Hancock Life and Massachusetts Mutual Life  are top rated by A.M. Best and Standard & Poors they are both rated Aa1 which is a great rating but still the second tier. Moody's "highest grade" is Aaa NOT Aa1.
3. Northwestern Mutual Long Term Care Company, a wholly owned subsidiary of Northwestern Mutual Life Insurance Company, does in fact have the top ratings from the three rating agencies that Donald Jay Korn refers to as well as Fitch Ratings.

Conseco Dumps Seniors' LTC policies into Trust

In an article entitled "Insurer Casts Off Long Term Care Policies" in today's Wall Street Journal, it was reported that Conseco, Inc. has transferred many of its long term care policies into a state supervised independent trust. The move, which affects 140,000 policyholders was made allegedly because "the policies were a drag on the company's earnings because they were underpriced and required continuing capital infusions to meet the long-term needs of policyholders".

Click here for how Conseco, Inc. announced the transaction on November 12, 2008

WSJ reports of fear among policyholders, most of whom are seniors. or families of the seniors. California plaintiff's attorney, Frank Darras was said to have estimated that former Conseco Senior Health Insurance policy owners would have to pay at least $2,083 more in premiums over the next five years under the new trust, a problem for owners whose average age is 80. The Pennsylvania insurance department wasn't specific, saying only that some rate increases are likely to be necessary to avoid insolvency based on current information and projections.

Frankly, and in my personal opinion, this is totally Con SUCKO!

The statement that long-term-care policies are guaranteed up to a limit of at least $100,000 in every state, according to Peter Gallanis of the National Organization for Life and Health Insurance Guaranty Associations or in one-third of states, limits are up to $300,000; and in another third, up to $500,000 gives many little solace.

I have both sold and owned long term care insurance for many years. I feel fortunate to not own a Conseco LTC policy because in Stamford, CT the cost of a nursing facility is $300 per day plus or over $113,000  annually! What good is a $100,000 limit to me?

Long Term Care Insurance For Plaintiffs, Attorneys and Brokers

Think Long Term Care Insurance is simply for old-timers in nursing homes? Think again!

According to a study published by the American Association For Long Term Care Insurance:
$3.5B in claims were paid out in 2007 to 180,000 Americans.
3% of new claims open were for clamants under age 60.
43% of claims were for home care
32.9% were for assisted living

Structured settlement industry stakeholders should be acutely aware of life's twists of fate and the costs associated with maintaining a life when there are special needs or long term care needs, for example when the drunken schmo that runs that red light has only $100,000 in coverage and your PIP amount is not adequate.

While Alzheimer's was the number one cause of LTC claims, other conditions more familiar to structured settlement stakeholders follow closely behind. For example injury was #4 out of 9, Arthritis was #5.

Do you own long term care insurance and are you recommending it to your clients? Consider opening the discussion as part of the settlement planning process.

I have owned Long Term Care insurance as a "defensive investment" since I was 38. I pay $83.64 per month (barely a grand a year) for what started as $200/day benefit for lifetime. The daily benefit has increased at 5% per year and is now at about $310.25/day of $113,000/yr and counting of financial muscle between me and my assets in the case of a scenario that requires long term care.

If you are able to qualify, the purchase of long term care insurance can help preserve assets leaving them more to enhance the quality of life for themselves and their family.

Think you're invincible now? Why not look at it as a cost saving thing?

According to the 2008 National Long Term Care Insurance Price Index $150/day benefit for 3 years (mine is lifetime) for a 55 year old averages $1,578 per year for a single and $1,064 per year when combined with a spousal plan. To approximate my current daily benefit today the 55 year old would need to pay on the average $3,156 per year or $2,128 with spousal discount. A 65 year old would have to pay on the average $6,000 per year as a single or $4,026 per year with a spousal discount.

So are you getting younger and healthier? Remember, you must qualify medically to get the long term care insurance.

Thinking about putting it off til you get closer to retirement?  Given the last few month's events have your retirement plans changed due to an erosion of your savings?  Think smart and plan ahead.