I think of LTC as “Asset Protection Insurance” as it’s function is to slow the rate at which you need to deplete your other savings & assets to provide care as you age.
Personally, I’d keep the premiums the same, saving the difference with other assets and hope for the best. The right choice is more complicated than the premiums and benefits. It includes the size of other assets, her specific home & how far away a concerned loved one is living.
I’m now caring for the third of three siblings who needed help with activities of daily living as CHF, broken bones and dementia made them increasingly dependent.
The eldest (childless) had a LTC policy that she expected would pay for in-home care. And the daily rate would have done as she’d hoped, except her home was not accessible. A series of broken bones in her 80’s meant repeat assisted living and nursing home stays that were about 3x the daily rate of the policy. For the broken bones, the LTC paid zero, as the problem was her home, not the diagnosis. Once diagnosed with Alzheimer’s, the policy paid a third, her pension & SS paid a third and her savings and ultimately the sale of her home covered the other third.
The youngest (effectively childless) had zero savings and collected the minimum SS, qualifying him for Medicaid during a post-hospital re-hab stay. Medicaid provided full time (36 hours per week) of personal care attendants that enabled him to remain at home and not in a Medicaid funded nursing home, up to the point where he entered hospice. The aides were fantastic, but they can’t do anything medical, so it fell to me to manage medications & change dressings and to cover meals & toileting in the hours they weren’t there.
The middle sibling is my mother. No LTC policy. Her “asset protection insurance” is having several offspring living nearby, including daughters & granddaughters who are nurses. Diagnosed almost five years ago with dementia, she cannot live alone or manage any of her affairs or personal needs. Can’t remember if she ate 1 minute ago or how to make a phone call. Because of family, she was able to delay spending her assets for care, although we are now at that phase.
And this is the paradox of healthy living with good genes and excellent diet & exercise habits: a tenth decade of life, which in her case includes cognitive decline. In contrast to loved ones who died suddenly or after brief illnesses at younger ages, largely attributable to smoking, alcohol & obesity; she might live another 5 years with dementia. Round-the-clock care at home is very bit as expensive as in-facility care.
Near me, hiring help through an agency runs about $34/hour with a 4 hour minimum commitment. Someone with your mother’s policy would have a benefit enough to cover an 8-hour shift or two 4-hour shifts per day. (Among my friends who have physically disabled loved ones, a split shift works the best, helping with moves into & out of bed). You have to evaluate if the home is accessible, are there other costs of upkeep, ie… lawn maintenance, and if she developed cognitive impairment, how long would her assets cover care for the other 16 hours per day.
I’m neck deep in this and have been for a while having cared for other loved ones, one who died with vision loss, another from cancer.
I think in the MMM world, there is a tendency to overlook how personal care needs can deplete savings, ramping the annual spend rate from, say $2000/month (what my mother used to live on) to $9000/month (what we spend, just for home health aides for part of each day).
