So popping back to update what I learned/where we are at.
Was provided with the information by the GoldenCare rep. He was very informative and also not any pressure at all, just giving me options. He covered 4 options, comprehensive, cash benefit, hybrid with universal life and hybrid with annuity. The third option covers those people who want to feel like they will "get something" for their payments, for obviously if you do not need it you just pay premiums and get nothing back, but you are paying more for a life insurance policy you no longer need. My view on life insurance is it is basically income replacement and helps to pay off a home and provide a softer landing for a spouse when the other dies, most important with children involved. As we get older we just need enough to cover our death expenses, which can easily be handled from our FIRE stash, so we plan to phase out our term life insurance soon since the kids are all adults. Therefore buying another life insurance policy is foolish IMO, so this option was discarded immediately.
Similarly, annuities are for those who cannot fund their retirement/expenses on their own and do not trust themselves to get the cash flow they need, so they pay someone to give them their money. The agent agreed, and said only reason they even propose it is their is a company that will pay 3x what you put in, so for $100K LTC annuity you will get $300K in payout. So this option needs $100K to get $300K. Important later for the math, but was also quickly discarded.
So this left us with two options to learn more about. In the end they are similar with a few differences. What I found is all LTC insurance provides you with a set amount of coverage. There is no option, as I thought, perhaps naively, to cover "all expenses until you die for LTC". Comprehensive gives you two equal pools of money, one for each spouse. Obviously if you are insuring yourself and single this would be different. In our case the agent was quoting $300K in coverage or $150K for each of us. Given the typical costs pf LTC that are commonly accepted, that you will spend $250-$300K per couple for LTC over your lifetime, this is a good minimum to target, and that is how the agent ended up there. The policy is with Mutual of Omaha and costs $282 a month for me at 52 and my wife at 49. The unique features are we can dip into the others to about 90% of the value while the other is alive and 100% of the value if the spouse dies and has not used their benefit. You can adjust the inflation amount each year and choose what level you want (your premium rises and falls accordingly, and the premium quoted is with 3% inflation adjustment level). The policy pays the providers directly.
Cash benefit provides two buckets of $250K each for a total of $500K in coverage for $174/month. Unlike the comprehensive the buckets cannot be combined, so each person had $250K. It is with Manhattan Life. It is a simple interest 5% for inflation and starts at 50% of the value for coverage initially (so $125K each) and at Year 5 you finally have access to the full amount ad is when the 5% kicks in. This means after 20 years you have doubled your coverage at which time it stops at the $500K each. The policy sends you checks to cash and does NOT pay the providers, paying $8000/month for home health care for a year and $12000/month for assisted living+ for another 12 months. So if you do the math that coverage is actually $252K in total. The policy also has a one time reset, meaning if you only needed it for say 9 months after an accident and then are not needing to draw for 6 months or more, the policy fully resets and you have access to the full $252K again.
So it costs $2087/yr for cash benefit or $3384/yr for comprehensive. So after 20 years with cash benefit we'd have paid a bit of $40K to have access to $500K (or at least $250K if only one needs it). There is not tracking where it is spent, so once you begin the draw you can just draw it down and if you did not use if all for care you have the money to cover expenses as needed. Given that the typical costs for HHC is $2.5-3.5K/month (20 hours a week), AL is 4-6K/month and full nursing home is $8-9K/month you can see that the payouts for the cash benefit will let you extend your benefits to 3-4 years depending on your costs. This aligns with the typical 3.5 years of care required if someone needs it giving you a very good level of coverage. Like RunRooster I am not sure how this is expensive, though I'd say some of their figures I do not agree with. It is catastrophic insurance and seems priced accordingly.
RunRooster, again the in home care is not that expensive typically. The nice thing was GoldenCare has typical rates for your zip code so they could give you that, but basically unless you are in CA or the Northeast US he said the number cited above apply across the US. You could inflates them 50-75% in the other places. But no way a single year of in home care is 30 years of payments, so that is wrong. At best that single year of "typical" (meaning no more than 20 hours per week) will be about $5K, so you cover maybe 2 years of premium payments.
The last point is that the premium price stays the same over the time you keep paying, so if I need to keep the policy into my 70s or 80s I will still just pay $174 a month. That was one of the biggest questions I had.
So you cannot find a policy that just covers lifetime care and would cover 14 years unless you chose to buy $3M in coverage which obviously would cost a lot more a month, so you need to be clear you are not getting anywhere close to that for $2,500 a year. You are buying access to an agreed upon limit of money and the points are do you want to pay more for dipping into spouses benefits, ability to adjust for changing inflation numbers, etc. At this point as my wife and I weigh this if we did it we would do the cash benefit. It is closest to term life which means I am not paying for any fanciness, just actual coverage. If I get to the point when we are 75 and our FIRE stash has grown to millions then I can just stop paying and I've paid the least possible for the most coverage in the interim (again just like term life). But right now it seems like any other insurance (medical, auto etc.) that I hope to only pay premiums on and never use, but if I need it for the worst case (one of us comes down with MS and needs nursing home care for a few years at the end in our 50s) I'm much better off than if I tried to self fund.
Love to hear thoughts or questions, now that you know what I know from what is offered.
