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I am 63, good health, widower, just retired, own home, zero debt, lifetime annual income $104k before taxes (ss & pension combined), $40 in savings, about $915k in tax deferred savings and my funeral arrangements all prepaid. My CFP recommends a LTC policy that guarantees $10k per month up to $500k and a death benefit of $500k to my heirs if I don't use it (or less the amount paid out if I do). It costs about $1100 per month or about 12.7% of my income. I live simple, don't care to travel or socialize so my spending needs are minimal. Do I need this insurance and is it a good deal? I'd rather just save the money and invest it elsewhere but he says the policy is good because it is not taxed to my heirs?

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Isn't it important for readers of this forum to be given correct information?
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Respecting KatieKate's right to post her own personal opinion from experience here without accusations that her understanding is severely flawed.
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@sendhelp,

The "quote" that Katiekate received was not for a long-term care insurance policy. She was talking about a universal life insurance policy that has a "long-term care rider". She said it was "long term care insurance" but it's not. I was simply explaining that she was not accurately describing long-term care insurance.

Secondly, she stated that traditional long-term care insurance (like her mother has) is not available today. That's completely false. Over 13 different insurance companies sell traditional long-term care insurance.
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Respecting Katiekate's right to post her own opinion from personal experience here.
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Stay far away from Allstate! My experience thus far is very negative. They are not following the contract verbiage , denying coverage for Assisted Living Facility, although meets all criteria. I was told verbally five times the facility we picked was fine. Reason for denial, "changed their mind"!!
Research very carefully the company you choose, you don't want to pay in premiums to be denied on a whim.
#allstatestinks
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@Katiekate,
You state, "BUT! They do not write these policies any more."

Long-term care insurance is available for sale in all 50 states. Over 13 different companies sell long-term care insurance. Your understanding of how these policies work is severely flawed.
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Fortunately most home care agencies or long-term care facilities today will process your long-term care insurance claim for free.
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@Katiekat,
What you have described is NOT long-term care insurance. That's not how long-term care insurance works. Some agent showed you a life insurance policy that would allow for some of the death benefit to be used for long-term care. Those policies are grossly overpriced compared to true long term care insurance.
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Just a postscript
My earlier reply had some funny math
$1,100 a month at 3% for 20 years would get you ~$360,000
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Thanks to everyone for their comments. As a matter of fact, my (former) CFP is also an insurance agent, so I'm sure that is why he pushed for the life insurance with a LTC rider.
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Your "CFP" is probably an insurance agent who earns a commission on these policies. He's not selling you long-term care insurance. He's selling you a life insurance policy with a long-term care rider. Those policies are grossly overpriced compared to true long-term care insurance.

For only $200 per month you could get $500,000 of true long-term care insurance.
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Just to be clear, knowing what I know now I'm sorry I encouraged my folks to buy LTC insurance.
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Are you absolutely sure that a long-term care policy company will even be in business when/if you need to make a claim?
If you are crunching the numbers, factor in the percentage of possibilities that you will never need LTC and will leave this earth by so many other various natural occurences.

So, in your financially secure status, arrange to have your own care, on your terms. imo.
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Nature,
I actually thought the process to get my mom's claim approved was so time consuming by design that some people would just give up and thank goodness I had both financial and health power of attorney - unfortunately since memory care is considered assisted living she only receives 60% of her benefit which doesn't even cover a third of the cost of her facility
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I encouraged my parents to purchase LTC insurance. They have bare minimum policies & have been paying on them for 15 years. I'm in the process of filing a claim on my mother's behalf. The process is VERY complicated: you have to get this form & that form completed by various people', you have to provide billing statements from facilities, etc. Since my parents live 7 hours from me, it has been a difficult process. I understand the need to make sure she meets the criteria, but, at age 87 she would never be able to do this herself. There are entities that will help you make a claim, but it's hard for me to justify paying someone to obtain these benefits after she has been paying all this time! Bottom line, I agree with those who recommend taking the $$ you would pay in premiums & invest it wisely. It will be much easier to take advantage of later on.
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My mom is in her 90s and I manage her accounts, currently in AL at 60K/year above her annual income. She has the same investments as you. If she goes into a NH then add 3 K more/month. She makes about 20 K in SS plus pensions, the rest about 60K per year from investments. Her investments came from her brother when he died and she was accumulating 6-8% per year by barely touching it. So if you do not touch that account you should be able to project how much it will be worth in about 20 years. I assume since you accumulated so much that you can look back a few years to see what % has been accumulating.

Back to mom, 3 years ago the market was down and she lost 100K. The market took an upturn and now she is back to almost where she was before and that is with me taking out funds to pay for her care.

So here's the kicker. I estimated that she would have about 10+ years of NH care on what numbers I crunched. If you were to go in a good private NH and live past that 10 years time, would you really care on how you live if you go on Medicade? I recommend to not do LTC insurance. If you want, check out the pricing now and how much interest it would accrue based on where you are keeping $ saved now.

I do recommend that you see an elder care attorney, preferably one who is independent of large firms. Get your POA, medical POA, Living will done. Since you may be in your 80s by the time you need LTC, you may want to choose someone who is one generation behind your age. This would include your attorney and POA, and maybe your broker so that they are at the peak of their profession when you need them the most.
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From what I have learned in my own search for LTC insurance, the cost is very high at our age, and the benefits are low.

Expect to pay $750 per month or more. No benefits payable in the first 5 years. After that, the daily benefit starts at $65 per day and gradually increase to a max of about $150 per day after 15 years.

Really? You are better off putting that $750 away ... in 15 years you will have more than the max life benefit of these policies.

Insurance companies are dropping out of this market. People live a long time, and they are losing money on the old policies. 

So, look close at the qualifying conditions.   You have to have 3 of the 5 following conditions....  cannot walk, cannot toilet, cannot feed yourself (does not mean cook), cannot dress yourself, cannot bathe yourself.

You could be completely bound to a wheelchair, and still not qualify!  

The overriding condition is dementia.   

Still hard to qualify, hard to keep the benefit.   AND! Before you can start collecting reimbursement under this policy..you have to first pay out of pocket up to 90 days yourself.   Not qualify for 90 days...actually pay a licensed and certified agency 90 days.     If you only have help 5 days a week...then 90 days will actually take 18 weeks to satisfy.     Then, even at $150 per day...it covers only about 8 hours.

My Mom has such a policy.  Purchased 17 years ago.   It is a great policy for her.   It pays for up to 10 hours a day for her...it works for her because she has me all the rest of the time...and I actually only use it a few hours a day so that the benefit max. Lifetime payout will stretch for the rest of her expected life.   

BUT!   They do not write these policies any more.   And it was REALLY expensive.
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I would highly recommend LTC. I'm 60 but got about 5 yrs ago and pay about $300/mo. It covers about $200/day but does adjust to inflation if those costs rise. AL in NC runs from $2500-4000/mo and then memory care where my mom is (moderate facility) is $8K/mo. NH can be upwards of $12K/mo and in-home care (if you should ever need 24/7) even for short period is about $400/day. So those expenses add up very fast. As you can see, even at $1000/mo investment; if you paid for the next 20 yrs and you needed at age 85; you would've invested $240K; but in 20 yrs that would be only 2 yrs of care and then they go thru your assets -- before medicare can kick in. That leaves nothing to your heirs. My mom is in good physical health but mentally incompetent. She just entered memory care at $8K/month. We are selling her house and she and my dad saved very well for retirement and conserved most. But even at that, mom will go thru all her money (investments, savings, house sale) etc. in 5 yrs provided she doesn't enter NH or have added costs (for example, even in memory care, should she need skilled care or personal assistance -- that all is an added expense above the monthy fee).

We don't want to burden our children. I pray I will not need or linger longer than the 3 yrs
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If it pays out a max of $500k and you don't anticipate drawing down all of your savings I'd think twice since you seem to live well within your guaranteed income
I'm not a big believer in spending money so kids get a benefit - you could end up shelling out $250k before you ever use it

If you invested $1100 a month and could generate 3% say in a long term muni tax exempt bond fund you'd have $270k in 20 years tax free which of course would pass to your heirs at the value at the time of your death so no taxable income to them if they liquidated the fund
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I guess my only other questions to you would be - what's the hereditary factor? I know there's no guarantees but did you parents live into their late 80's or longer? Is there any history of things like cancer or dementia? And finally- how important is it to you that you leave money to your children? I know you mentioned the insurance payout, but if you didn't have the insurance and your own money paid for either in-home care or a facility?

Actually, that makes me think of another question- does your purposed policy allow that $10k a month to be paid the same regardless of type of facility- is Independent and Assisted Living covered with in-home caregivers?

Sorry for the additional questions - your original post was so very specific but I'm trying to look at it from all the angles. Both my parents had LTC policies that were activated but they were so poorly written- in my opinion- that I honestly think they would have been better off with a good investment.
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Correction: $40k in savings and heirs are two children, grown and on their own.
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Question, $40 in savings or are there some zeros missing?? Do you own a home? Does your budget run at positive (you aren't using all of your monthly income) or a negative (you are dipping into savings each month)? Who are your heirs? children?
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