Long Term Care Insurance Reimbursement Option

[Robert123]

Thanks Mr_Ed for your input. In my research, I also learned that the average mortality rate for an individual after triggering benefits from a Long Term Care Insurance is one to two years. So the typical payout for the insurance company will only be that long. I read that if a person has a net worth of at least $700,000 not including home, then they have enough to self-insure. If their net worth is less than $200,000 then medicaid will be there for them. My biggest gripe with this insurance is having to meet at least two ADLs. Some people who spend their life to 100 years old and in an assisted living for the last 10 years of their life only meet the requirement for one ADL and are spending $50,000 per year. They paid the insurance premium for the last 35-40 years. They get nothing from their insurance. I decided to self-insure. I read the horror stories about the insurance companies refusing to provide benefits. Seems to me to be a conflict of interest having the insurance company decide if they will pay you benefits as the qualifications are not always clear. Does some have dementia or do they not? Not like car insurance where you get into an accident or you don't, or life insurance where you die or you don't.

 

[ltcadviser]

That is correct.

Thank you rovand and Itcadvisor, you answered my question. Then it would seem to me that as the premium for the cash/indemnity option is considerably higher than the reimbursement option, and that the reimbursement option covers most of the costs of the nursing home, then the reimbursement option is the most cost effective?

Indemnity policies cover informal care provided in home. Indemnity policies are more cost effective and flexible for home care needs. The reimbursement policies require proof of loss forms for qualified LTC services as deined within the contract and often require home care to be provided by and through a home care agency, which is more expensive than informal care.

There will be no material difference between the two models once the policyholder is a resident in a facility.

People buy the indemnity policy for the home care flexibility.

 

[Tahoe Ray]

Thanks Mr_Ed for your input. In my research, I also learned that the average mortality rate for an individual after triggering benefits from a Long Term Care Insurance is one to two years. So the typical payout for the insurance company will only be that long. I read that if a person has a net worth of at least $700,000 not including home, then they have enough to self-insure. If their net worth is less than $200,000 then medicaid will be there for them. My biggest gripe with this insurance is having to meet at least two ADLs. Some people who spend their life to 100 years old and in an assisted living for the last 10 years of their life only meet the requirement for one ADL and are spending $50,000 per year. They paid the insurance premium for the last 35-40 years. They get nothing from their insurance. I decided to self-insure. I read the horror stories about the insurance companies refusing to provide benefits. Seems to me to be a conflict of interest having the insurance company decide if they will pay you benefits as the qualifications are not always clear. Does some have dementia or do they not? Not like car insurance where you get into an accident or you don't, or life insurance where you die or you don't.

"Use it or lose it" and "self-insuring" are two reasons why people like hybrid LTC.

If you read Jack's site, he does a great job explaining how these products work and why they're popular for people with your thought process.

 

[ltcadviser]

I also learned that the average mortality rate for an individual after triggering benefits from a Long Term Care Insurance is one to two years. I read that if a person has a net worth of at least $700,000 not including home, then they have enough to self-insure.

Reading information on the internet can be dangerous. Hope it works for you.

 

[Mr_Ed]

Thanks Mr_Ed for your input. In my research, I also learned that the average mortality rate for an individual after triggering benefits from a Long Term Care Insurance is one to two years. So the typical payout for the insurance company will only be that long. I read that if a person has a net worth of at least $700,000 not including home, then they have enough to self-insure. If their net worth is less than $200,000 then medicaid will be there for them. My biggest gripe with this insurance is having to meet at least two ADLs. Some people who spend their life to 100 years old and in an assisted living for the last 10 years of their life only meet the requirement for one ADL and are spending $50,000 per year. They paid the insurance premium for the last 35-40 years. They get nothing from their insurance. I decided to self-insure. I read the horror stories about the insurance companies refusing to provide benefits. Seems to me to be a conflict of interest having the insurance company decide if they will pay you benefits as the qualifications are not always clear. Does some have dementia or do they not? Not like car insurance where you get into an accident or you don't, or life insurance where you die or you don't.

This is even more baloney.
The average doctor's visit is only $100, I guess I don't need medical insurance.

 

[Mr_Ed]

Thanks Mr_Ed for your input. In my research, I also learned that the average mortality rate for an individual after triggering benefits from a Long Term Care Insurance is one to two years. So the typical payout for the insurance company will only be that long. I read that if a person has a net worth of at least $700,000 not including home, then they have enough to self-insure. If their net worth is less than $200,000 then medicaid will be there for them. My biggest gripe with this insurance is having to meet at least two ADLs. Some people who spend their life to 100 years old and in an assisted living for the last 10 years of their life only meet the requirement for one ADL and are spending $50,000 per year. They paid the insurance premium for the last 35-40 years. They get nothing from their insurance. I decided to self-insure. I read the horror stories about the insurance companies refusing to provide benefits. Seems to me to be a conflict of interest having the insurance company decide if they will pay you benefits as the qualifications are not always clear. Does some have dementia or do they not? Not like car insurance where you get into an accident or you don't, or life insurance where you die or you don't.

If the insurers are refusing to pay benefits, why will over 300,000 people receive benefits from their LTCi policies this year, totaling over $12 billion?

 

[Mr_Ed]

"Use it or lose it" and "self-insuring" are two reasons why people like hybrid LTC.

If you read Jack's site, he does a great job explaining how these products work and why they're popular for people with your thought process.

Every type of insurance is "use it or lose it".

There are good reasons to buy hybrids. To avoid "use it or lose it" is not one of them.

 

[Tahoe Ray]

Every type of insurance is "use it or lose it".

There are good reasons to buy hybrids. To avoid "use it or lose it" is not one of them.

Ok.

 

[scagnt83]

Every type of insurance is "use it or lose it".

There are good reasons to buy hybrids. To avoid "use it or lose it" is not one of them.

 

[Mr_Ed]

if you do the math, the people who buy the single premium hybrids are the one's who are losing.

if they use it, they lose it.
if they don't use it, they lose all the return they could have had on that money if they'd kept it themselves.