LTC Benefit & Premium

Aug 18, 2018

  1. f55c6
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    I'm 56 and was quoted $278 a month for a CalPERS LTC "Premier 10 year plan." The premier plan offers $200 a day, a 10 year benefit period and $730,000 of coverage. The plan comes with a 3% simple interest inflation protection. The quote does not include return of premium but does include a survivorship benefit. Is this a fair price for the plan when compared to other commercial carriers?
     
    f55c6, Aug 18, 2018
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  2. ltcadviser
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    3% simple interest? You are only 56 years old?

    You must not plan on sticking around very long.
     
  3. Mr_Ed
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    There are better policies out there.
     
    Mr_Ed, Aug 20, 2018
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  4. f55c6
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    IDK what you mean? I hope to be around for awhile. The 3% simple interest just comes with the prebuilt comprehensive policy. CalPers site says, "With a Comprehensive plan, you may choose from three pre-packaged options or customize your own plan from a wide range of options. These plans have a 90-day elimination period and you do not have to live in California in order to purchase or receive benefits under the Comprehensive Plan."

    I can build a custom plan with 3% compounding inflation which adds $24 a month to the premium, or 5% compounding protection which adds $154 a month to the premium. I'm thinking some coverage is better than nothing.

    If premium was not a factor and my budget money was unlimited, I could build a custom plan starting at a benefit of $400 per day, 5% annual compounding interest inflation protection, 10 years 1.46 million benefit, with "Restorations of benefits rider/option", "Non forfeiture benefit", and "Return of Premium Benefit." All for the low, low low price of $1,036 a month, or 12,432 a year.
     
    f55c6, Aug 20, 2018
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  5. Mr_Ed
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    Have you looked around for other quotes?
     
    Mr_Ed, Aug 20, 2018
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  6. ltcadviser
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    Let me explain:

    I understand you are premium sensitive. Fine.
    There is only a $24 monthly difference between simple and compound inflation. So, you can buy $180 day with compound with CalPERS for same or less premium than $200 with 3% simple will cost you. The $180 day with compound will yield greater LTC benefits to you at age 74+++ than your $200 day, 3% simple idea.

    So if you plan upon being with us for awhile before you need care, at the very least please redesign your plan with 3% compound inflation.

    Best of luck.
     
    Last edited: Aug 20, 2018
  7. f55c6
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    Thank you. I will definitely look at the custom plan.
     
    f55c6, Aug 21, 2018
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  8. f55c6
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    I compared the quotes between the Premier preselected coverage and the Custom Select. Lowering the daily coverage to $180 with 3% compounding inflation protection over 3% simple interest would increase the monthly premium for me and my wife to $531 from $491.

    We would have around $241 a day in coverage at year 10 by compounding the 3%. Simple interest, the coverage would be $260 a day at year 10 since we started at a $200 a day benefit. Total 10 year coverage drops to $657,000 with the custom plan from $730,000. The compounding interest starts to pick up steam after year 10 and the daily coverage increases. Thanks for the suggestion. Now we have to make it through underwriting.
     
    f55c6, Aug 21, 2018
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  9. Mr_Ed
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    If you and your wife are healthy, you should look into buying Mass Mutual's long-term care policy.
     
    Mr_Ed, Aug 21, 2018
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  10. ltcadviser
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    I dont know what any of these pre-packaged policy designs entail. I have CalPERS rates on my computer and I see that $180, 10 year BP, 3% compound is a lower premium than $200, 10 year BP, 3% simple.
     
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