Couple LTC Questions

[2112Greg]

This isn't a space I've worked in much at all, just a few joint cases over the years. But I'm wondering a few things because this might be starting to be something I'm doing more of.

Let's say a 55 year old takes out an LTC policy. Let's say that in 5 years, the person's finances change and they cancel the policy or let it lapse (whichever). Does the insurer transfer what's been paid into it as an LTC benefit? Meaning, let's say they put 10,000 in before it lapsed, does that 10k become an LTC benefit? Or does the money just go away...?

I have always thought that the best way to structure this kind of plan would be like a paid up life insurance policy. Meaning, you pay x for x number of years and it's paid up for x amount of guaranteed benefit.

Is there such a thing as this anywhere on the market?

I have a couple other questions, but if any of you LTC guys can help here, I'd appreciate it...

 

[yankee466]

This isn't a space I've worked in much at all, just a few joint cases over the years. But I'm wondering a few things because this might be starting to be something I'm doing more of.

Let's say a 55 year old takes out an LTC policy. Let's say that in 5 years, the person's finances change and they cancel the policy or let it lapse (whichever). Does the insurer transfer what's been paid into it as an LTC benefit? Meaning, let's say they put 10,000 in before it lapsed, does that 10k become an LTC benefit? Or does the money just go away...?

I have always thought that the best way to structure this kind of plan would be like a paid up life insurance policy. Meaning, you pay x for x number of years and it's paid up for x amount of guaranteed benefit.

Is there such a thing as this anywhere on the market?

I have a couple other questions, but if any of you LTC guys can help here, I'd appreciate it...

If you check off the box that says "Shortened Non-forfeiture", the $10K paid would be set aside for $10K worth of future LTC benefits (or maybe one month of nursing home benefits...whichever is greater, etc), if ever needed, and therefore not lost. If you do not check the box, then it would be lost. You have a pay a little extra for the feature, but most carriers, if not all, offer that as an option. Generally you have to pay in for at least 3 years first. There is a little fine print involved, but that is the gist. Back in the days of 10 pays etc, there were some formulas involved to calculate the residual benefit in that case.

 

[2112Greg]

Great, thanks for the reply!

Why did the paid up solution go away? I guess because it makes too much sense...?

At what age do you recommend people start to consider LTC? I've heard it all over the map...from 45 to 65.

What's the industry consensus, if there is one?

 

[yankee466]

Great, thanks for the reply!

Why did the paid up solution go away? I guess because it makes too much sense...?

At what age do you recommend people start to consider LTC? I've heard it all over the map...from 45 to 65.

What's the industry consensus, if there is one?

If you pay up the policy, they can no longer raise rates....hence its demise in general.

45-65 is a good spread......depends on when it is affordable and you have all your other financial bases covered. Stats claim average age people are buying these days is mid 50's. You obviously want to buy it while you are still healthy enough to qualify. Most people wait too long.

If your parents got Alzheimers at age 50, you will buy it at age 45. If they died playing golf at age 99, you may never buy it. Every case is different.