I'm hoping to get the opinion of the PF community on a recent Long Term Care Insurance policy my company has just offered.
Its an LTC policy attached to a Life Insurance plan. To keep things easy, a $100k Life benefit for me would cost $100 per month and a $75k benefit would cost my spouse $100. The LTC benefit is 2x the face amount and the Life benefit would still be paid out as long as the LTC benefit doesn't exceed 1x the face amount. Premiums are static and won't increase unless I change the benefit amount. The kicker is that this open enrollment is guarantee issue and won't require proof of good health.
At face value, this seems like a great deal – since it would take ~83 years for the premiums to eclipse the Life benefit. The only thing that I suppose I would be losing out on is buying power and market gains if otherwise invested. Also, $100k won't buy as much care due to inflation over the years.
My spouse and I aren't quite 40 years old and we're well below the recommended age to get LTC. I have planned to get LTC for a long time now – not at such an early age – but it would be nice to check off the LTC box. We also have children so the extra layer of financial security is tempting.
We can afford the premiums but we're also strongly thinking about retiring in the next 5-10 years. We keep our expenses low so the thought of adding an extra $2,400 annually is a significant budget item that we'll have to carry every year, even after retiring.
Do you think it makes sense to pull the trigger on LTC even though we're over 15 years early from the conventional wisdom of when to buy LTC and likely another 35 years before we would even statistically need the coverage? I'd love to hear both pro's and con's that you might have – I'm really scratching my head as to what to do here.
Thanks for your insight!
Long Term Care Insurance for Young Adults with Children
byu/Uniqueuponhim6 inpersonalfinance
Posted by Uniqueuponhim6
2 Comments
I’d consider term life insurance. I suspect you could get far more coverage for a much cheaper premium. Down the road, assuming you invested the difference, you’d probably come out ahead deciding on the LTC insurance when you’re a more appropriate age.
Look at what the policy covers. Ltc in general doesn’t seem to have as good an offering in the coverage as they used to. Most people prefer/need assistance in their home prior to nursing facilities and a lot of the cheaper policies dont cover that. And with nursing home costs running 5 to 10k a month, per person , you would burn the life benefit way before you passed away.
I would see what you can pick up for term life insurance somewhere else, since its not a free benefit. You could probably get more coverage for the same premium. Shop the ltc and go off of what you want it to cover, not the price of the premium.