90% Premium Increase?
- Thread starter spedprof
- Start date
Charlie456
Expert
- 88
I think it depends on why you bought a much higher than average daily benefit amount in the first place. Are you looking to make sure nothing comes out of pocket if a LTCi event arises? Do you plan on staying in NY (metro area?)? Can you afford the increase? While that daily benefit is certainly higher than what I typically sell, that doesn't necessarily mean you are over insured. Whatever you don't spend on a daily basis remains and makes your policy last longer, so should you get something like Alzheimer's disease (where folks need care for a much longer period of time) it's unlikely you will spend the $500/day initially but you will quite possibly need more than 5 years worth of care so stretching it out with a higher daily benefit amount is a good thing. I have a client who wants to leave every penny she has to a particular charity. She has seen lots of LTC in her family and wants every penny protected so she has a very large plan. Also, NY has the 20% tax credit which also helps take the sting off of those premiums.
Arthur Rudnick
Guru
- 1,652
originally posted by Charlie456
Charlie,
I stand by my previous statement "At $512/day, the man is over-insured", even in NY.
He's got a pool of money of $934,000. Don't you think that's more than enough coverage?
Charlie,
I stand by my previous statement "At $512/day, the man is over-insured", even in NY.
He's got a pool of money of $934,000. Don't you think that's more than enough coverage?
Charlie456
Expert
- 88
I would never tell anyone they were over insured, especially without knowing anything about what's important to them. I did say it's a lot of coverage and more than what I usually sell... However, if this couple lives a very affluent lifestyle and wanted to go into a top notch, luxurious facility in NY $512/day is not excessive. I just met with a woman who is 88 years old and just spend $22,000 in 6 weeks for home care. She needed 24 hour care and didn't want a live in person as she lives in a 1 bedroom apartment. That works out to $528/day. I'm not claiming that's typical but it is certainly possible. Telling folks they are over insured when you have no idea what kind of care they will need and for how long is a liability. I specialize in LTCi and design plans for folks to meet THEIR needs, not mine, or the average Joe's but their specific needs.
Last edited:
Possibly more than enough coverage at 5% compound; possibly not at 2.7% compound.
I had lunch yesterday with a 58 year old client of mine that is a financial planner. He bought a policy 8 years ago with an 8 year pool of money 5% compound, and no claims offset language. So, policy will last a minimum of 10 years. Last year he fell 11 feet down a well and is paralyzed from the waist down. He will need care for the rest of his life. Let's stop all the talk about average needs and average costs. I think we can agree life does not work in averages. When a real claim occurs a claimant will most likely never feel they are over insured.
Charlie456
Expert
- 88
Arthur Rudnick
Guru
- 1,652
originally posted by ltcadviser
originally posted by Charlie456
Jack & Charlie,
Well, a little different perspective:
When discussing "average needs and average costs" one can not accurately project what average "needs" will ever be, but you can pretty much make an educated guess on what the average costs will be. Including the future cost of premiums (taking into account possible future rate increases) the cost of care, along with any out-of-pocket costs down the road will give you a total.
I've always felt that LTCi should fall under the same category as any other insurance product. Insurance is about "risk sharing"; risk between the policyholder and the carrier.
For your 68 year old policyholder who will require care for the rest of his life, looking back now that was a pretty bad call on both you and your client's parts to not have purchased a policy with lifetime benefits. That would have suited his needs much better. Now, at approximately 78 years old, for the remaining years of his life he has no insurance.
Now, don't take offense because I'm not implying that you sold an incorrect product. In 99% of the cases a 10-year benefit period is more than adequate.
If I met a prospect that told me he was 100% sure that he would wind up in a nursing home because every elderly member of his family did, then I'd suggest (and he would buy) a policy with an unlimited benefit period (if it's still available) with $1,000/day in benefits.
But, no one is sure they're going to wind up needing expensive care for life. So, we sell policies on the basis of "potential out-of-pocket", vs. the premium. The folks that we're dealing with have both income & assets and in the future they will continue to have income & assets. Therefore, they should to some extent coinsure the risk. Can you insure 100% of the risk? Yes, (and we've all done it) but that's not what insurance is about and very rarely is a policy sold that way.
I agree with your statement: "When a real claim occurs a claimant will most likely never feel they are over insured".
But the question remains, did the benefits purchased reflect a desire for the policyholder to share a comfortable part of his future risk? I'm willing to bet that he was.
Just my 2 cents.........
originally posted by Charlie456
Jack & Charlie,
Well, a little different perspective:
When discussing "average needs and average costs" one can not accurately project what average "needs" will ever be, but you can pretty much make an educated guess on what the average costs will be. Including the future cost of premiums (taking into account possible future rate increases) the cost of care, along with any out-of-pocket costs down the road will give you a total.
I've always felt that LTCi should fall under the same category as any other insurance product. Insurance is about "risk sharing"; risk between the policyholder and the carrier.
For your 68 year old policyholder who will require care for the rest of his life, looking back now that was a pretty bad call on both you and your client's parts to not have purchased a policy with lifetime benefits. That would have suited his needs much better. Now, at approximately 78 years old, for the remaining years of his life he has no insurance.
Now, don't take offense because I'm not implying that you sold an incorrect product. In 99% of the cases a 10-year benefit period is more than adequate.
If I met a prospect that told me he was 100% sure that he would wind up in a nursing home because every elderly member of his family did, then I'd suggest (and he would buy) a policy with an unlimited benefit period (if it's still available) with $1,000/day in benefits.
But, no one is sure they're going to wind up needing expensive care for life. So, we sell policies on the basis of "potential out-of-pocket", vs. the premium. The folks that we're dealing with have both income & assets and in the future they will continue to have income & assets. Therefore, they should to some extent coinsure the risk. Can you insure 100% of the risk? Yes, (and we've all done it) but that's not what insurance is about and very rarely is a policy sold that way.
I agree with your statement: "When a real claim occurs a claimant will most likely never feel they are over insured".
But the question remains, did the benefits purchased reflect a desire for the policyholder to share a comfortable part of his future risk? I'm willing to bet that he was.
Just my 2 cents.........
- Thread starter
- #18
As the original poster, I am both fascinated with and thankful for the discussion... Much for us to consider... But as a question, if we are currently "overinsured", which I understand we are and build up a pool of money that is quite large and perhaps unneeded under current and likely future costs, does the fact that I have a 5 yr policy limit the ability to use those resources within that 5 yr window, or can I use the excess after the 5 yrs? i assume the former, but a comment in the discussion seemed to suggest that the money was there until it was used up.
Thanks so much... I am learning so much I may open my own agency (JOKE).
Thanks so much... I am learning so much I may open my own agency (JOKE).
I am not an agent but a policyholder like you. However, from what I know your policy can extend further than the five years if you don't use the maximum amount per day. So if you have a policy that gives you $500/day but your stay is costing only $400/day that means each day $100 is being carried over. Thus at the end of each month you would have $3100 or $3000 carried over from those months depending on 30 or 31 day months. Those monies are carried over beyond your five years because you have not exceeded the daily benefits.
The 5 year Benefit Period means that the policy will pay benefits for no less than 5 years. If you do not use the full Daily Benefit each day, whatever is not used remains in the policy for future use.
If, for example, you used only half of your Daily Benefit every day, it would take at least 10 years before your policy would run out of benefits.
Similar threads
