Get your affairs in order!

Wife and I have everything organized we started working on it after my parents passed awa and we realized we needed to be on the same page.

My mother passed way three years before my father. After my father died we found two life insurance policies that my mother had taken out on herself and my father was the beneficiary and and what turned out to be over 500 shares of Exxon that my dad forgot he bought many years ago. It was worth enough to throw a wrench into the financial mess after a death.

 

Being a single guy with no children, these are the things I have squared away;
1) Developed a living revocable trust
2) Appointed a successor trustee which could be anyone but I hired a licensed professional fiduciary
3) Transferred all of my assets into the trust (this is the hardest part, title on house deed needed to be change, bank accounts had be in the trust, etc.)
4) Secured a Long Term Care insurance policy for 3 years of nursing home coverage or in home care assistance if needed, yearly premium $1250 at age 45 (I'm 51 now). Premiums get higher the longer you wait. Some people say I got it too soon at age 45 but I disagree and enjoy the peace of mind and I can afford it.
5) Appointing a POA for healthcare should I become incapacitated
6) Donating my body to science
7) I have 2 brothers who will get 50% equal shares of my estate after fiduciary fees of course.

 

I didn't use this service but it gives you an idea how much it might cost to develop a trust. This actually on the cheap side, I paid over $1000.

 

I am a single woman (52) with no children but parents that I want to take care of if I predecease them, 4 brothers and lots of nieces and nephews. Your list is a good one. Thanks for posting.

 

At the risk of being the bearer of bad news, LTC insurance has been gutted due to the caps on how long the policies will pay out because the initial losses were massive. Everyone originally underpriced the risk. 3 years of coverage is not insurance against your real downside risk, especially when there is a decent chance you've already paid for 25%+ of that cost with premiums. The cost/benefit analysis here is not that great for many people.

The real risk for many people is not that you go in nursing care for a year or two, especially when your premiums are liable to have paid for that first year of care anyway. It is that you end up in a nursing home for 5 or 10 years.

New policies generally don't lock in the premiums, either - you are totally at their mercy that they won't jack them up over time. And you're going to pay extra for a lot of the features you may need, like an inflation rider. And there aren't all that many carriers left due to the loses.

Think long and hard before you buy this coverage, the value is just not as clear as something like term life insurance.

Personally, the more compelling insurance-like deals in my area had been the senior communities that offer a continuum of care for a fixed monthly price and a lump sum on the way in. Not shockingly, they've found that, in many cases, they underpriced the risk, especially in a falling interest rate environment,, and they've been dialing back the benefits as well. These are sometimes referred to as CCRCs.

 

It can also be really helpful to know what life insurance policies are there so you don't forget to make the annual premium payment near the end of someone's life. This happens far too often because the person who makes the payments is incapacitated.

 

My passwords are a flash drive in the joint-with-husband safe deposit box. My plan is to replace it twice a year or if I make changes to major items.

A relative's husband had a stroke and became incapacitated. This was a few years ago but she had to fight with his cell provider to get the plan stopped. They insisted that only he could do it. Someone needs to be your POA.

 

Smart! The memory-care place my Mom is in is close to $6K per month! Fortunately, she has a decent amount of assets in her trust and she won't outlive them, but it could've been much different for us.

 

For some reason premium quotes online cannot be found or calculated. This is my actual annual premium and lifetime benefit amounts including a 5% inflation protection. Again I reiterate don't wait until it's too late. The naysayer's might say it's not worth it or the insurance companies may go bankrupt or increase your rates or may not have enough coverage, etc. But if you wait too long you'll be priced out of the market. I say get the LTC now if you can afford it rather than wait when medical problems might arise and old age makes it unattainable. Nursing homes can easily run into the 100's of thousands of dollars per year.

 

Check state laws too - some have separate medical decision maker laws that are different from "regular" power of attorney. Make sure you cover all your bases, as needed! Also - esp if your wishes include organ donation (PLEASE!) or a DNR, make sure you tell people around you NOW. My mom has been telling me since I was a teenager and I do the same. Your family and friends should have a general idea of what you want (along with the appropriate legal documents & proxies you'll want in place).

 

Hard to say what is #1 - but being able to access email is very, very, very important.

Way too much information comes that way that can cause all kinds of issues if you have no access or visibility to it.

 

the risk is not getting priced out - if you can't afford 6k a year when you're 65 you probably don't have enough assets to need LTC. It's that your health declines to where you can't pass a screening

FYI you do not have real inflation protection. You have a fixed increase. There is a difference. 5% is a good number, but it's not quite the same thing.

This is the challenge with these policies. You have 3 years of coverage of a fixed amount. You did not buy lifetime insurance that hedges you against an extended illness regardless of how the value of the US dollar or the cost of health care changes. At age 75, your premiums (rolled forward with 4% interest ) are 25% of the maximum amount of coverage you can receive. The maximum amount of assets you can protect here is limited.

Is that worth it? It depends upon your personal financial situation. For people with a lot of money or not a lot of money, the answer is generally no.

Keep in mind that the average person can't buy your policy. They have to buy what is available now. Genworth has gotten killed on claims over the last few years to the point where their continued existence was in some doubt - they are selling out to a Chinese company as part of their plan to not go bankrupt. It is quite likely that their LTC pricing has become less favorable given their losses plus the decline in fixed income yields on assets they would hold as investments

 

premium quotes aren't online because the products are less consistent.

$500k of life insurance is $500k of term life insurance. Everyone offers this product for standard time periods like 20 years. Everyone has a few classifications of risk. It's easy to compare apples to apples. And there are lots of big name carriers who are willing to sell this through independent agents.

LTC products vary with inflation protection, elimination periods, maximum benefit, health underwriting standards, etc. And the number of carriers who are selling this is much lower, including a couple of big names like Northwestern Mutual who want to sell the product through their agents.

 

I recognize we are derailing the thread and I'm intending to stop soon but I feel obligated to point out as an actuary that this is not true insurance, the way the policies work are not well understood, and the cost/benefit is not what the average person thinks that it is.

These are extremely difficult products for insurers to offer. The antiselection risk is high (and increasing in a world where people can get genetic tests that tell them they are likely to develop certain conditions), medical inflation is not able to be hedged in capital markets, the payout timeframe is suboptimal (it's a hugely backweighted annuity benefit), assets are subject to reinvestment risk due to the duration, etc.

 

Rumor what would you suggest that I do in my case? Cancel the LTC insurance? BTW, I have no dependents so any type of life insurance would not do me any good. I thought about creating my own fund by setting aside $1250 per year or more in a taxable account but even with moderate gains (investments could lose money as well) it would only amount to let's say 30 years x $1250 per year (not including gains, loses, inflation, yield redistribution, etc.) = $37,500 in total in today's dollars, that's maybe 6 months in a nursing home today (30 years from now maybe 3 months stay or less).

 

The best play if you have had it for a few years is often to keep paying for a couple of reasons:

- you have a better deal than you would get today because they underpriced the risk when they set your premium

- the past is a sunk cost. You are older and closer to ages when you would likely be disabled. Given the premiums you showed are basically flat, 6 years of aging has made it a better deal since 6 years of inflation has occurred and your risk of disability increases almost exponentially with age.

These policies have extremely low lapse rates for these two reasons.

I can't speak to your personal financial situation or your health which may have other implications that are pros or cons to keeping paying.

The analysis for "should i keep this policy" is totally different from "should I buy it". You should feel like you have an ok deal because they are likely undercharging you for the portion of your risk that you have insured. You should just be aware that you only have three years of coverage at a daily reimbursement level that may be under what you would have to end up paying. You still have some risk.

 

Thank you all for the very honest comments and insight. I have some work to do, actually a ton of work.

 

lol, blackmail from the grave!

 

My MIL and I do not share the same taste in decorating. My in-laws currently have 3 houses (plus other rentals - that's just 3 they live in) She tells me if I don't keep all her furniture, she'll haunt me after she dies. I tell her I'm not afraid of ghosts and I am NOT keeping the furniture she's had since the 70s ;-)