Long term care insurance

[caracarn]

So going to try another thread here are the ones that I found are older or a bit on a different bent.

As we move towards FIRE wife and I felt that perhaps a blind spot of how we would cover LTC if we needed it.  I've seen that the average couple ends up spending $300K for this in retirement at some point, and one could argue we might be able to self fund but not sure if that makes sense.  I've seen older answers that if you are just wanting to cover the cost let the assets spend down and then after $2K in assets Medicare/Medicaid will cover it, however that is good for the last spouse but if only one needs care, a pretty crappy spot to put someone you love in to watch the savings dwindle away to nothing so that they can then let something cover the LTC while they then have nothing to live on.

So how are folks here handling these risk?   It's possible we will not need it, either dying early of something dramatic like a heart attack, or being blessed with enough health to live out our lives until something takes us out without having to move into a facility.   Yet it seems a bit short sighted to avoid having a plan if it does happen that does not leave the healthy spouse in a pickle.

[Exflyboy]

No LTC here. We have a NW of roughly $4M (Age 61 and 58) that has a lot to do with it.

I can tell you I have no intention of bankrupting my Wife. I "think" I am fairly certain if I developed Alzheimers I would end my life while I was still able to. Of course if I had a massive dibilitating stroke then I may have no ability to end it all anyway.

[2sk22]

I'm in the same camps as @Exflyboy - I have set aside reserves for covering long-term-care. I use a retirement calculator called Pralana that allows you to specify these kinds of expenses. My Dad passed away a few years ago, mostly from the effects of Alzheimers. He needed round-the clock care for the last couple of years of his life. Thankfully my parents had more than enough in savings that they were able to fully cover the expense of care.

[iris lily]

Same as the guys above, we self insure.

My income is $60,000 and that plus a $million will cover LTC for me for ten+ years. I am the likely one to get dementia, it is rampant in my family.

If it is DH who needs it, that cuts into our stash more because his income is only $30,000. But his retirement funds are much larger than mine.

When a spouse dies, you can breath a sigh of relief because then all of the household assets belong to the remaining spouse (in most scenarios) and all can go to end of life care until exhausted, then the gubment takes over your care.

[Omy]

We are planning to self fund. It's one of the reasons we fatFIREd.

We also have an annuity that has a long term care rider. The income part starts in as soon as 8 years. Should either one of us not be able to perform 2 of the 5 acts of daily living, the income doubles for up to 5 years which should help a little.

[wenchsenior]

We've seen first hand how crushingly expensive this is. My father poo pooed LTC insurance for years, insisting that he would die rapidly and/or kill himself if he got sick enough to need regular care. If he were to ever need care, he was absolutely insistent that he never be placed in a nursing home and that care be given at his home.  Also, he was sure his 2 million dollar estate could easily cover it.

His wife, otoh, was much more realistic and bought LTC insurance for herself after seeing her own mother live 10 years + in a nursing home.

Problem was, most of the value of their estate was in land, and they ran into some unexpected financial issues late in life. So when it came down to my father needing care, he had neither the will nor the wherewithal to end it, nor nearly as much liquid cash as was required. . his in- home care currently costs about 13K per month, plus his other living expenses (food/bills). Despite his desperate desire to keep all his property, we've had to sell some of it, which is a psychological nightmare on its own... my father is going to FREAK OUT when he realizes that property has been sold. And even selling everything we could that isn't immediately on top of his own lot, he'll be out of cash in about 2 years. So at that point, he'll have to go on Medicaid and into a nursing home regardless of his wishes. To prevent his wife (who is still trucking in good health) to have all her money/savings/security taken by my father's situation, they ended up divorcing. So SHE is in relatively good shape with a chunk of cash plus LTC insurance.  He's ok right this second, but not for long.

Also, while I know that the average time of needing full time care is less than 2 years, that has simply not been the pattern on either side of my family. People either die suddenly of a heart attack or quick cancer, or they linger in nursing homes for years and years.

It's just...really really really expensive to care for the elderly.


So, since my husband and I are going to never have an estate worth more than 2 million (which used to be rule of thumb 'cutoff' for not needing LTC insurance), we bought a policy to cover my husband. I am not eligible b/c of numerous chronic health problems (there's some irony...I'm more likely to need the care). So I will continue to work until I save about 250-300K additional to try to self insure. If one of us needs extensive care in a home, we will also divorce to protect the other's estate, so that the care-needing spouse can spend down assets and go on Medicaid if needed.

[jim555]

Since California is getting rid of the asset test for elderly Medicaid next year it makes sense to consider CA.  That way your stack doesn't have to be drawn down first before it kicks in.  It can continue to grow.  I'm sure they would Estate Recover any owed balance, but that is after death. 

[mcneally]

What are the actual costs and coverage of LTC people are getting? I'm only vaguely aware. I know my parents have a policy that is supposed to pay ~$65k per person for up to 3 years, and any remaining benefit unused carries to the other spouse. I do their taxes and a decade ago when costs could have been relevant to taxes, I think they were paying a little less than $2k per person. I don't know how long they've been paying that (age 70 now). When I met with my parents and their Edward Jones guy to transfer all of their stuff to Vanguard, he commented on how good that LTC policy was and you couldn't get such good terms today.

I've heard people talk about how hard it can be to get LTC to pay out.

If the cost is $2k/ year for, say, 30 years, with a max benefit of $195k, it seems better to self insure.

Maybe this is naive of me, but I also kind of see a paid off house as LTC insurance. The proceeds of the house you no longer live in can fund your end of life care. Not a decade in a memory care unit, but probably a length of time that a person would actually want to remain alive.

I hope I go quick naturally or retain the functionality to do so myself when it's time. 

[stoaX]

What are the actual costs and coverage of LTC people are getting? I'm only vaguely aware. I know my parents have a policy that is supposed to pay ~$65k per person for up to 3 years, and any remaining benefit unused carries to the other spouse. I do their taxes and a decade ago when costs could have been relevant to taxes, I think they were paying a little less than $2k per person. I don't know how long they've been paying that (age 70 now). When I met with my parents and their Edward Jones guy to transfer all of their stuff to Vanguard, he commented on how good that LTC policy was and you couldn't get such good terms today.

I've heard people talk about how hard it can be to get LTC to pay out.

If the cost is $2k/ year for, say, 30 years, with a max benefit of $195k, it seems better to self insure.

Maybe this is naive of me, but I also kind of see a paid off house as LTC insurance. The proceeds of the house you no longer live in can fund your end of life care. Not a decade in a memory care unit, but probably a length of time that a person would actually want to remain alive.

I hope I go quick naturally or retain the functionality to do so myself when it's time.

You mention 3 important points:
-the overall maximum payout. That's what turns me off about LTC plans. I'd rather pay the first $195k and then have the coverage kick in for costs beyond that. 
-i also worry about the insurance company finding reasons not to pay, right at the time I'm not in a position to fight them.
- I've heard Clark Howard go through the history of LTC plans and mention that plans available a decade ago are much better than what's available today.

[ender]

Keep in mind that if the average couple spends $300k, then either:

• insurance companies charging clearly less than $300k are going to go bankrupt
• the average person isn't insurable, so the average cost for those buying LTC is less than 300k

[Omy]

Or the insurance company will find ways not to pay out.

[bacchi]

Or the insurance company will find ways not to pay out.

Yes, this.

I've two friends that are helping their parents with early-onset Alzheimer's. They both had to lawyer up when the LTC insurer refused to pay.

[Exflyboy]

Then lets ask the obvious question..

If a couple is to self insure.. How much of one's stash should he assigned to LTC at say 60 years old?

I mean it could be argued we currently have a "spare" $million.. Do we "need" insurance?

[Runrooster]

- I've heard Clark Howard go through the history of LTC plans and mention that plans available a decade ago are much better than what's available today.

Disclaimer: I work in the insurance industry but not long-term care.  I've studied the history on the job while also experiencing it firsthand through my parents.

So, "better" is relative; cheaper, with larger lifetime limits or no limits.  The problem is that unless you went into pay 10 years ago (my Mom did), your plan either went bankrupt or drastically increased its rates. In a nutshell, long term care insurance was priced badly because it was new, insurance companies underestimated the cost and overestimated the lapse rates.  My Dad did not go into pay 10 years ago, his premiums doubled while his benefits got limited. I said "better" is relative because from a regulator's point of view, the current product is better: it can actually afford it's liabilities, is unlikely to have further premium increases or benefit cuts.  It's a better product because there is now enough data to price accurately.

That said, if you believe insurance companies are pricing accurately, the question with any insurance is: 1. are you average or worse than average? 2. what are your alternatives?

[wenchsenior]

Then lets ask the obvious question..

If a couple is to self insure.. How much of one's stash should he assigned to LTC at say 60 years old?

I mean it could be argued we currently have a "spare" $million.. Do we "need" insurance?

Some of this is a guessing game where you have to weight odds. For example, if dementia is a common issue in your family and/or multiple members have lasted more than a year or two in long term care, then you weight the odds higher that you might also.

So then you try to run some number estimates.

For example, per my Dad above. His cost of living right now is about 15-20K/month (most of that is the LTC costs). So he's burning 180K-240K per year to lie in a bed or be wheeled in a wheelchair around his own home. He only rarely is even up to short trips outside or in the car.

It would be a bit less expensive if he were at a nursing home (which he emphatically does not want). And while he could theoretically die at any point, there's nothing right now that indicates he's likely to in the next couple of years at least.

So, how long could your estate support that kind of burn rate and stay liquid or keep your still healthy spouse out of the poorhouse?

That's basically the kind of numbers you are looking at. Adjust as your best estimates dictate based on family history.

[stoaX]

- I've heard Clark Howard go through the history of LTC plans and mention that plans available a decade ago are much better than what's available today.

Disclaimer: I work in the insurance industry but not long-term care.  I've studied the history on the job while also experiencing it firsthand through my parents.

So, "better" is relative; cheaper, with larger lifetime limits or no limits.  The problem is that unless you went into pay 10 years ago (my Mom did), your plan either went bankrupt or drastically increased its rates. In a nutshell, long term care insurance was priced badly because it was new, insurance companies underestimated the cost and overestimated the lapse rates.  My Dad did not go into pay 10 years ago, his premiums doubled while his benefits got limited. I said "better" is relative because from a regulator's point of view, the current product is better: it can actually afford it's liabilities, is unlikely to have further premium increases or benefit cuts.  It's a better product because there is now enough data to price accurately.

That said, if you believe insurance companies are pricing accurately, the question with any insurance is: 1. are you average or worse than average? 2. what are your alternatives?

Good point. "Better" is a fuzzy word. A plan isn't worth much if the insurer goes out of business. 

[caracarn]

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.  It is catastrophic insurance and seems priced accordingly.   

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.

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.

[caracarn]

So one of the things I had asked the agent was if they could give me quotes if I waited 10 years, so I could model that out and see if starting a policy now is better or worse from a straight numbers standpoint.   The results to me were surprising in a couple ways.   What I was looking at was total cost to the point we'd never need it (I'd be 102, so likely gone for certain and my wife 99 so similarly well beyond life expectancy).   

In both cases it actually costs less to hold the coverage starting now even paying premiums for the 10 extra years, HOWEVER, there is a big difference in any flips of when one option is better than the other.   So for the comprehensive option the only scenario that it makes sense to start now is if I live to the bitter end.   For the cash benefit (which really seems to be the best option) it is always less expensive to begin now and by a long margin.  So if I started our policy now, over 50 years I's pay $104,394 in premiums.  If I waited until I was 62 to start and paid until 102, I'd have paid $177,393.60 in premiums.  The difference in the comprehensive plan over that same period is under $9K with both costing over $160K in premiums, and again that's for $300K in coverage versus $500K. 

So I'm leaning towards moving forward with the cash benefit policy, as the financial security it provides against the most catastrophic risk we'd have just barely costing 20% of the total benefit assuming a 50 year run (which is statistically unlikely) seems to make sense.   I'd love to hear what opposing arguments are.  I mean sure I'd instead have $20K more every decade that could be invested but the intangible lack of stress about this topic seems to be worth much more than that to me.   So I'm guessing this becomes one of those purchases that is a lot more psychological than most.

[snic]

So one of the things I had asked the agent was if they could give me quotes if I waited 10 years, so I could model that out and see if starting a policy now is better or worse from a straight numbers standpoint.   The results to me were surprising in a couple ways.   What I was looking at was total cost to the point we'd never need it (I'd be 102, so likely gone for certain and my wife 99 so similarly well beyond life expectancy).   

In both cases it actually costs less to hold the coverage starting now even paying premiums for the 10 extra years, HOWEVER, there is a big difference in any flips of when one option is better than the other.   So for the comprehensive option the only scenario that it makes sense to start now is if I live to the bitter end.   For the cash benefit (which really seems to be the best option) it is always less expensive to begin now and by a long margin.  So if I started our policy now, over 50 years I's pay $104,394 in premiums.  If I waited until I was 62 to start and paid until 102, I'd have paid $177,393.60 in premiums.  The difference in the comprehensive plan over that same period is under $9K with both costing over $160K in premiums, and again that's for $300K in coverage versus $500K. 

So I'm leaning towards moving forward with the cash benefit policy, as the financial security it provides against the most catastrophic risk we'd have just barely costing 20% of the total benefit assuming a 50 year run (which is statistically unlikely) seems to make sense.   I'd love to hear what opposing arguments are.  I mean sure I'd instead have $20K more every decade that could be invested but the intangible lack of stress about this topic seems to be worth much more than that to me.   So I'm guessing this becomes one of those purchases that is a lot more psychological than most.

I guess the opposing argument is, let's take just that first 10 years worth of $20k in premiums. Instead of buying LTC insurance, invest it and earn 6% or 8% per year, and after 40 years you end up with $206k or $434k. So if that's when you need LTC insurance, you'll have almost the full benefit amount from the investment returns on just the first 10 years worth of premiums.

Of course the insurance is for the eventuality that you'll need LTC sooner, possibly much sooner, than 40 years from now. Whether you "need" insurance or not is, as you say, very psychological. The numbers might tell you that it works in your favor under multiple scenarios and the hit (premiums paid) doesn't hurt too much if you end up not ever needing LTC. But psychologically, if you have a few million saved now, why bother with an insurance policy that pays only a few hundred grand? What's the difference between leaving your heirs 4 million vs 3.5 million? Or dying with 500k vs 0?  Whereas if you have much less saved, it starts to approach what you called it above, "catastrophic insurance" - something that will really save you from running out of money under that catastrophic eventuality. Of course, it will also prevent you from investing some of the capital needed to get your net worth the point where you don't need that catastrophic insurance.

Finally, another thing to think about is inflation. You're paying $174/month in today's dollars for a benefit that seems large today, but 40 years from now will seem like a pittance compared to what LTC will cost at that point. This is roughly what happened with my mother's LTC insurance: the benefit increased by 5% per year but was capped at 2x the original benefit amount. It currently pays $4300 per month towards assisted living (2x the original benefit of $2150) and will do so for a total of about 4 years before the total benefit amount runs out. When she bought the policy, assisted living cost somewhere in this range, but what she is paying now is over $13k/month. The LTC insurance does help, and she's likely to get more in benefits than she paid in premiums (roughly $2k/year for 25 years, with a premium increase to $3k or so somewhere in there) - but it's not quite as attractive if you consider that $2000 25 years ago is nearly $4000 in today's dollars.

[lifeisshort123]

What is the right age to buy LTC insurance? I hear all kinds of different pieces of advice.

Is 30? 35? 40? too young?

[wenchsenior]

What is the right age to buy LTC insurance? I hear all kinds of different pieces of advice.

Is 30? 35? 40? too young?

45 ish seems to be the earliest it is reasonable for most people to start looking. It's a trade-off b/c if you wait too long, you potentially develop conditions that make it far more expensive (or you become functionally uninsurable; this happened to me by my early 40s. We bought for my husband (who is very healthy) in his early 50s.

[caracarn]

What is the right age to buy LTC insurance? I hear all kinds of different pieces of advice.

Is 30? 35? 40? too young?

Yes, per the data study I did in my case I'd think there is less upside if it had gone the other way, starting at 43 instead of 53.   Some of my thinking on this is absolutely based on the fact that we see this as catastrophic insurance for the short term.  It then comes down to how likely you feel you'd develop a condition that places you into a situation in the next 5-10 years of your life that you'd need to pull the trigger.   So starting at 30 means the window is 35-40 to become at least semi incapacitated and need major care, and 35-40 is a lot less likely then 58-63 and even less than 78-83.   I think the "right age" is very individualized.

[caracarn]

So one of the things I had asked the agent was if they could give me quotes if I waited 10 years, so I could model that out and see if starting a policy now is better or worse from a straight numbers standpoint.   The results to me were surprising in a couple ways.   What I was looking at was total cost to the point we'd never need it (I'd be 102, so likely gone for certain and my wife 99 so similarly well beyond life expectancy).   

In both cases it actually costs less to hold the coverage starting now even paying premiums for the 10 extra years, HOWEVER, there is a big difference in any flips of when one option is better than the other.   So for the comprehensive option the only scenario that it makes sense to start now is if I live to the bitter end.   For the cash benefit (which really seems to be the best option) it is always less expensive to begin now and by a long margin.  So if I started our policy now, over 50 years I's pay $104,394 in premiums.  If I waited until I was 62 to start and paid until 102, I'd have paid $177,393.60 in premiums.  The difference in the comprehensive plan over that same period is under $9K with both costing over $160K in premiums, and again that's for $300K in coverage versus $500K. 

So I'm leaning towards moving forward with the cash benefit policy, as the financial security it provides against the most catastrophic risk we'd have just barely costing 20% of the total benefit assuming a 50 year run (which is statistically unlikely) seems to make sense.   I'd love to hear what opposing arguments are.  I mean sure I'd instead have $20K more every decade that could be invested but the intangible lack of stress about this topic seems to be worth much more than that to me.   So I'm guessing this becomes one of those purchases that is a lot more psychological than most.

I guess the opposing argument is, let's take just that first 10 years worth of $20k in premiums. Instead of buying LTC insurance, invest it and earn 6% or 8% per year, and after 40 years you end up with $206k or $434k. So if that's when you need LTC insurance, you'll have almost the full benefit amount from the investment returns on just the first 10 years worth of premiums.

Of course the insurance is for the eventuality that you'll need LTC sooner, possibly much sooner, than 40 years from now. Whether you "need" insurance or not is, as you say, very psychological. The numbers might tell you that it works in your favor under multiple scenarios and the hit (premiums paid) doesn't hurt too much if you end up not ever needing LTC. But psychologically, if you have a few million saved now, why bother with an insurance policy that pays only a few hundred grand? What's the difference between leaving your heirs 4 million vs 3.5 million? Or dying with 500k vs 0?  Whereas if you have much less saved, it starts to approach what you called it above, "catastrophic insurance" - something that will really save you from running out of money under that catastrophic eventuality. Of course, it will also prevent you from investing some of the capital needed to get your net worth the point where you don't need that catastrophic insurance.

Finally, another thing to think about is inflation. You're paying $174/month in today's dollars for a benefit that seems large today, but 40 years from now will seem like a pittance compared to what LTC will cost at that point. This is roughly what happened with my mother's LTC insurance: the benefit increased by 5% per year but was capped at 2x the original benefit amount. It currently pays $4300 per month towards assisted living (2x the original benefit of $2150) and will do so for a total of about 4 years before the total benefit amount runs out. When she bought the policy, assisted living cost somewhere in this range, but what she is paying now is over $13k/month. The LTC insurance does help, and she's likely to get more in benefits than she paid in premiums (roughly $2k/year for 25 years, with a premium increase to $3k or so somewhere in there) - but it's not quite as attractive if you consider that $2000 25 years ago is nearly $4000 in today's dollars.

OK, but 40 years for me places me at 93, an age where I'd likely have already needed it, be dead or not need it.  I guess the other way I'm thinking of it, justified it, is that it lowers my FIRE number as I can essentially remove this expense from the equation, at least for the amount covered.   The logic that I did not share was my wife and I view this as a parachute to allow the "surviving" (I place that in quotes because it is more a statement for physical capabilities being intact rather than life force) other to adjust the financial picture to not totally blow their standard of living.   Right now it would likely mean figuring out how to place all assets in an irrevocable trust, which then gets you to the Medicare/Medicaid thresholds where they pay perpetually, however some family members who work in the insurance industry say their is legislation in the works to close that loophole to shield your money.  As with any FIRE decision, we need to adapt to any changes in reality and if that happens we'd need to reassess on whether to continue the coverage or not.

[snic]

So one of the things I had asked the agent was if they could give me quotes if I waited 10 years, so I could model that out and see if starting a policy now is better or worse from a straight numbers standpoint.   The results to me were surprising in a couple ways.   What I was looking at was total cost to the point we'd never need it (I'd be 102, so likely gone for certain and my wife 99 so similarly well beyond life expectancy).   

In both cases it actually costs less to hold the coverage starting now even paying premiums for the 10 extra years, HOWEVER, there is a big difference in any flips of when one option is better than the other.   So for the comprehensive option the only scenario that it makes sense to start now is if I live to the bitter end.   For the cash benefit (which really seems to be the best option) it is always less expensive to begin now and by a long margin.  So if I started our policy now, over 50 years I's pay $104,394 in premiums.  If I waited until I was 62 to start and paid until 102, I'd have paid $177,393.60 in premiums.  The difference in the comprehensive plan over that same period is under $9K with both costing over $160K in premiums, and again that's for $300K in coverage versus $500K. 

So I'm leaning towards moving forward with the cash benefit policy, as the financial security it provides against the most catastrophic risk we'd have just barely costing 20% of the total benefit assuming a 50 year run (which is statistically unlikely) seems to make sense.   I'd love to hear what opposing arguments are.  I mean sure I'd instead have $20K more every decade that could be invested but the intangible lack of stress about this topic seems to be worth much more than that to me.   So I'm guessing this becomes one of those purchases that is a lot more psychological than most.

I guess the opposing argument is, let's take just that first 10 years worth of $20k in premiums. Instead of buying LTC insurance, invest it and earn 6% or 8% per year, and after 40 years you end up with $206k or $434k. So if that's when you need LTC insurance, you'll have almost the full benefit amount from the investment returns on just the first 10 years worth of premiums.

Of course the insurance is for the eventuality that you'll need LTC sooner, possibly much sooner, than 40 years from now. Whether you "need" insurance or not is, as you say, very psychological. The numbers might tell you that it works in your favor under multiple scenarios and the hit (premiums paid) doesn't hurt too much if you end up not ever needing LTC. But psychologically, if you have a few million saved now, why bother with an insurance policy that pays only a few hundred grand? What's the difference between leaving your heirs 4 million vs 3.5 million? Or dying with 500k vs 0?  Whereas if you have much less saved, it starts to approach what you called it above, "catastrophic insurance" - something that will really save you from running out of money under that catastrophic eventuality. Of course, it will also prevent you from investing some of the capital needed to get your net worth the point where you don't need that catastrophic insurance.

Finally, another thing to think about is inflation. You're paying $174/month in today's dollars for a benefit that seems large today, but 40 years from now will seem like a pittance compared to what LTC will cost at that point. This is roughly what happened with my mother's LTC insurance: the benefit increased by 5% per year but was capped at 2x the original benefit amount. It currently pays $4300 per month towards assisted living (2x the original benefit of $2150) and will do so for a total of about 4 years before the total benefit amount runs out. When she bought the policy, assisted living cost somewhere in this range, but what she is paying now is over $13k/month. The LTC insurance does help, and she's likely to get more in benefits than she paid in premiums (roughly $2k/year for 25 years, with a premium increase to $3k or so somewhere in there) - but it's not quite as attractive if you consider that $2000 25 years ago is nearly $4000 in today's dollars.

OK, but 40 years for me places me at 93, an age where I'd likely have already needed it, be dead or not need it.  I guess the other way I'm thinking of it, justified it, is that it lowers my FIRE number as I can essentially remove this expense from the equation, at least for the amount covered.   The logic that I did not share was my wife and I view this as a parachute to allow the "surviving" (I place that in quotes because it is more a statement for physical capabilities being intact rather than life force) other to adjust the financial picture to not totally blow their standard of living.   Right now it would likely mean figuring out how to place all assets in an irrevocable trust, which then gets you to the Medicare/Medicaid thresholds where they pay perpetually, however some family members who work in the insurance industry say their is legislation in the works to close that loophole to shield your money.  As with any FIRE decision, we need to adapt to any changes in reality and if that happens we'd need to reassess on whether to continue the coverage or not.

For "real world" perspective, my mother began claiming LTC benefits at age 89, and my father at age 80. My father did not survive long enough for it to make much difference in my parents' finances. It looks like the opposite will be the case for my mother.

Re insuring that the "surviving" other maintains their standard of living - what I worry about is discovering that when you need the benefit, the benefit you paid for ends up being much smaller than the actual cost of care due to either inflation or, over the long term, a benefit cap. So the actual usefulness is more to slow down the progression to financial ruin than to stop it. Which is better than nothing, and perfectly fine as long as that's what you're expecting.