Author Topic: Mustachians and LTC Insurance  (Read 12063 times)

Workinghard

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Mustachians and LTC Insurance
« on: February 03, 2014, 12:21:41 PM »
Suzie Orman and Dave Ramsey  both tout long term care insurance. I don't think it's something I'll ever get or be able to justify the expense, but I was wondering what others thought.

lackofstache

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Re: Mustachians and LTC Insurance
« Reply #1 on: February 03, 2014, 12:50:12 PM »
"While there are cases when insurance pays out for the individual, just remember that the insurance industry makes a profit off everyone as a whole.  The odds are stacked against you ever getting more out of insurance than you pay into it."

Insurance companies make some money off of premiums, but like mustachians, they then put those little green empolyees to work. Their real profits come from investments, not premiums.

LTC insurance is tricky. It's difficult to get (fewer companies offering it) and getting more expensive. I'm gonna hedge my bet against needing it, though. If my wife and I retire early, live well and then need LTC, I guess we'll use what resources we have at that point to get it. Once all our resources are gone, we'll be in the same boat as many others; on Medicaid. We'll still have had retired early and hopefully enjoyed life on our way to needing LTC.
« Last Edit: February 04, 2014, 07:28:06 AM by lackofstache »

Workinghard

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Re: Mustachians and LTC Insurance
« Reply #2 on: February 03, 2014, 01:20:56 PM »
Thanks for the link, Knaak. It gives validity to my views on insurance companies.  They're not our friends. That's evident with rate increases or refusal to insure. We have a homeowners policy and the exclusions annoy me no end. Exactly what am I paying for?

Lackodstache, we're planning on the same. I should be able to take care of my dh if necessary. Although I wouldn't want to be a burden, I have adult children that help and would never view it as a burden--at least if I was in my right mind.  :p

foobar

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Re: Mustachians and LTC Insurance
« Reply #3 on: February 03, 2014, 02:17:12 PM »
The point of insurance is not to get out more than you paid in. It is when an unfortunate event happens, your life isn't ruined.

LTC is interesting because in a lot of ways, everyone has a LTC policy: medicaid (not care). Pretty much the worst case is you don't get to pass an inheritance on to your kids. Reality is that about 50% (a lot higher for men, lower for woman) of people never go to a nursing home, and of the people that go, very few last more than 3 years (even at 100k/yr that is only 300k) and the average is more like 9 months. You can try and guess if you are going to be different from the average but in general this is not a product that I think is very useful for most people.

Here's a good article about insurance:

http://www.mrmoneymustache.com/2011/06/02/insurance-a-tax-on-people-who-are-bad-at-math/

While there are cases when insurance pays out for the individual, just remember that the insurance industry makes a profit off everyone as a whole.  The odds are stacked against you ever getting more out of insurance than you pay into it.

jfer_rose

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Re: Mustachians and LTC Insurance
« Reply #4 on: February 03, 2014, 02:22:56 PM »
Reality is that about 50% (a lot higher for men, lower for woman) of people never go to a nursing home, and of the people that go, very few last more than 3 years (even at 100k/yr that is only 300k) and the average is more like 9 months. You can try and guess if you are going to be different from the average but in general this is not a product that I think is very useful for most people.

foobar, could you please share the source for you data? I would like to do my best to account for eventual nursing home costs in figuring out how big my 'stache should be but I haven't known where to start. It looks like you may have come across some very helpful data and I would love to educate myself. Thanks!

Workinghard

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Re: Mustachians and LTC Insurance
« Reply #5 on: February 03, 2014, 02:25:57 PM »
Foobar, thanks for the stats and replying. That 100k would go a long ways in paying for in home help. I wonder if there's a higher percentage of people that go into ALFs or memory units?

foobar

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Re: Mustachians and LTC Insurance
« Reply #6 on: February 03, 2014, 08:29:18 PM »
I can't find the article I read a couple of years ago, but here is one with similiar numbers: http://www.nolo.com/legal-encyclopedia/long-term-care-insurance-risks-benefits-30043.html You can google around to read more. You can also good about what medicaid pays for it (and the various asset limits and so on)


One thing to point out is that you are not an average.  Maybe your living a lifestyle that makes is more likely that you will die of a heart attack at 65. Or maybe you have a family history of long life. And the policies have different coverage amounts. Some only help you when your in the home. Others will pay for care givers to come to your house.

I think for most people you are better off taking those premiums and investing but you have to think about all the situations. For example what happens if the husband goes into the home and runs up 400k in bills. How does that effect the wife (lets say she is 10 years younger and has long retirement in front of her still)?

Reality is that about 50% (a lot higher for men, lower for woman) of people never go to a nursing home, and of the people that go, very few last more than 3 years (even at 100k/yr that is only 300k) and the average is more like 9 months. You can try and guess if you are going to be different from the average but in general this is not a product that I think is very useful for most people.

foobar, could you please share the source for you data? I would like to do my best to account for eventual nursing home costs in figuring out how big my 'stache should be but I haven't known where to start. It looks like you may have come across some very helpful data and I would love to educate myself. Thanks!

bogart

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Re: Mustachians and LTC Insurance
« Reply #7 on: February 03, 2014, 09:53:42 PM »
I should be able to take care of my dh if necessary.

I'd have figured the same thing -- and I'm lots younger than DH, so that helps -- but seeing my dad decline into dementia and lose the ability to stand or walk has illustrated for me a serious flaw with the common "[younger] wife takes care of [older] husband" (or daughter takes care of father) idea.  I can no more lift and move the average adult male (nor either my father or husband) than I could fly to the moon (and I am neither petite nor a weakling). 

Watching what being in a nursing home that offers Medicaid beds involves (as noted, Medicare does not cover LTC) would leave me buying LTC enthusiastically, if I thought there were decent products (policies) available.  My sense from what I've read is that the industry is unstable and it's really not clear that a plan someone my age (40s) might buy now would be useful when we'll (likely) need it.  So, instead, I'm thinking about things like how the home, neighborhood, and community I live in can accommodate aging in place safely, and, of course, trying to save a 'stache of my own.

Workinghard

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Re: Mustachians and LTC Insurance
« Reply #8 on: February 04, 2014, 03:16:44 AM »
I haven't researched nursing homes, but I do know the patients in ALFs (which are cheaper) are becoming more acute. They can't provide nursing care, but they can assist with ADLs (activities of daily living). They have med techs that can pass meds. Medicare covers for a nurse or PT or OT to come in and see them on a short term basis for wound care, physical/ occupational therapy.  Most ALFs have dementia units. They also provide short term or respite care as needed for those in the community. In our area the ALFs range $1500-$4000k.  I'm also seeing private home converted to mini ALFs where a wife or couple will take care of 3-4 people.

honobob

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Re: Mustachians and LTC Insurance
« Reply #9 on: February 04, 2014, 03:22:35 PM »


I think for most people you are better off taking those premiums and investing but...
My LTCi will be paying over $225,000 a year 20 years from now.  I've "invested" maybe $18,000 over 14 years.  Today it would pay about $90,000 annually.  Would you detail the investing plan, instead of paying premiums, that could get me anywhere near the same coverage?  I do not want to be poor and in a skilled nursing home and have no MORE than $30.00 a month for incidentals.  Mustashian is one thing, being FORCED to Mustachiate is another.
« Last Edit: February 04, 2014, 03:34:46 PM by honobob »

Nords

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Re: Mustachians and LTC Insurance
« Reply #10 on: February 04, 2014, 10:37:40 PM »
Here's an extremely thorough analysis of the problem.  There's not much of a solution, except to jack up premiums:
http://lifeinvestmentseverything.blogspot.com/2014/02/insurer-nastygrams-when-long-term-care.html

My father's long-term care policy cost him about $11K in premiums and it'll pay out a max of about $318K by late November.  It was a sweet deal from John Hancock (fixed premium, capped payout, 5% inflation increase every year for 20 years) and they must be losing dumpsters of money on this demographic.  I filed Dad's claim just after the 18th year of the inflation increase, so from a fiscal perspective his timing just about maximized the policy's payout.

I'm eagerly anticipating the overhaul of the industry with hybrid policies, but it may take another 5-10 years.  Spouse keeps joking about Percocet cocktails and 9mm health insurance, but our plan is self-insurance.  Or at least that's my plan for as long as I'm considered cognitively competent, and you'll have to check with my spouse after that...
« Last Edit: February 04, 2014, 10:39:31 PM by Nords »

Workinghard

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Re: Mustachians and LTC Insurance
« Reply #11 on: February 05, 2014, 03:38:23 AM »
Honobob, I get what you're saying, but the "return" is only valuable if you end up needing long term care. And of course, you may not max out on benefits. I work with the elderly and NONE want to go to a nursing home. A high percentage don't even want to live in an ALF, and some that do regret selling their home and moving into one.

Someone had mentioned Medicaid.  There's also Palliative Care and Hospice. You no longer have to be "dying" for hospice and people can be on it for several years which would cover the average nursing home stay.

Nords, glad your dad was able to benefit from his policy! 

honobob

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Re: Mustachians and LTC Insurance
« Reply #12 on: February 05, 2014, 03:15:45 PM »
Honobob, I get what you're saying, but the "return" is only valuable if you end up needing long term care. And of course, you may not max out on benefits. I work with the elderly and NONE want to go to a nursing home. A high percentage don't even want to live in an ALF, and some that do regret selling their home and moving into one.

 ..... cover the average nursing home stay.

 
Actually my "return" includes home care at 50% so only $45,000 today and $113,000 twenty years from now.  My Dad needed almost ten years of LTC.  With my help he only needed 5 months in a SNF and 9 years in my home with just daycare expense.  Shortest months you'll ever see is when you're paying $5,000 a month to a SNF.  This is also NINE years that are NOT included in the statistics of "average" care needed.  Without my help he needed $600,000+ which he did NOT have.  On top of that $600,000 he needed money for doctors and medications.  He would also need to pay for such basics as laundry and, fer craps sake a TV!  SNF are NOT Club Med. 

My benefit is lifetime so there is no cap.  I have NO desire to use any of this but for the mere price of about a pack of cigarettes a day I have had over 5,000 days of blissful coverage.  Who is carrying liability coverage on their house or car thinking they've got to defend a lawsuit to get a "return"? 

I am NOT concerned about covering the "average" stay.  In fact, I can cover that now but then most all my money would be going to the SNF.  I want to cover the extended stay and have the ability to use "my" money to make that time as good as it can possibly be.  Basic living in a SNF is not that great.  SNF plus say, another $50,000-$100,000 a year can actually be tolerable.  Think private room, massages, COMPANY! (paid for or not company is good), better food and day trips.  Medicaid won't let you out the door.

When my Father was in a SNF I was there every day, he was supposed to die in less than six months! He was private pay and I had a job where I could take him to lunch and he could ride with me for some of my job.  In probably less than 30 days I was identified by the *"walkers" as a facilitator to the "outside".  They were up and about and wanted to go back home or just "outside".  They would follow me in my visits to the staff and my Dad and ask me to take them.  I'm sure family visited but even if they wanted to they could NOT take them anywhere if they were on Medicaid.  SUCKS.  I agree, NO ONE wants to be in a nursing home.  Nursing home on Medicaid?  Seriously?

*From the Walking Dead,  I'm doing a Netflix marathon.
« Last Edit: February 05, 2014, 05:55:56 PM by honobob »

honobob

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Re: Mustachians and LTC Insurance
« Reply #13 on: February 05, 2014, 06:20:55 PM »
....long term care insurance. I don't think it's something I'll ever get or be able to justify the expense, 
I responded to your later post not realizing you were the OP.   If you are having a hard time justifying the few thousand a year for the insurance you are in for a big "justifying" moment when you're asked for the $60, 000-300, 000 annual payments for LTC.  Do you have a better plan?


Workinghard

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Re: Mustachians and LTC Insurance
« Reply #14 on: February 05, 2014, 07:00:41 PM »
Honobob, I only got one quote from one of Dave Ramsey's ELPs, but it was more than a few thousand and there were a lot of exclusions. Now if it was a policy like Nord's dad, it would be different. Once we reach our retirement goal, hopefully in three years, I might revisit the option. I do think I would want a spousal benefit or transferable policy. Can't remember the exact words. Right now all extra is going to investments and I'm hyper focused on saving as much as we can before my dh retires. I'll continue to work, so our savings can continue to grow.

Blindsquirrel

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Re: Mustachians and LTC Insurance
« Reply #15 on: February 05, 2014, 07:16:12 PM »
  Like any insurance, odds are with the house. If you need it and have it it is great. Mother has Alzheimer's and after help at home has been 2.5 years in a Alzheimer's care ward. Insurance has paid $3600 a month toward the $6800 or so a month it costs us. We have been on the hook for about $1800 a month and while spendy, not as horrible as it would be without LTC.  Do not know what she paid in premiums but she worked for the state so it was not very much if anything. The baby boomers aging will crush the existing system both with numbers and cost. Not sure what will arise after that but will be a slow motion train wreck of sorts I think.

Dicey

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Re: Mustachians and LTC Insurance
« Reply #16 on: February 05, 2014, 07:23:58 PM »
I posted this in response to a slightly different question earlier today. Since it applies even more directly to your question, I cut and pasted it here:

As to Long-Term-Care Insurance, I think it's over-rated. Yes, long term care can be expensive. However, if you're a good saver, you can put those premiums to work in your 'stache and end up with plenty of money, should the need arise. I believe that there is a lot of fear-mongering among those who sell LTCI. Nobody wants to get old, be alone, sick and broke, so insurers prey on those fears. If you're Mustachian, you are far less likely to be without resources and as a result, can repel fear-mongerers with ease and confidence.

I have a LOT of older friends and of all the ones who have died, only one needed long-term care, because she had Alzheimer's. Not even remotely suggesting that this is a scientific study. What I am suggesting is that if you have saved enough money, you can self-insure. Why give the money to an insurance company, when you can keep it under your own control?  Yes, shit can happen and it can be expensive, but there other ways to cover it. More important, IMHO, is insuring against anything that interferes with your ability to earn a living before you've achieved FIRE. Disability insurance? YES, please. Long Term Care Insurance? No, thank you.
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foobar

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Re: Mustachians and LTC Insurance
« Reply #17 on: February 05, 2014, 07:47:56 PM »
Medicaid will not let you out the door for lunch? That hasn't matched my reality. The rule is that home doesn't get paid if the patient isn't in the bed at night. In most states they are required to hold the bed (google therapeutic leave) for you for 7-30 days (depends on the state).

People pimping insurance always talk about how it is just a few dollars a day. Those dollars add up. And you have to be very careful to get a fixed rate plan otherwise you get this: http://articles.latimes.com/2013/feb/21/business/la-fi-calpers-longterm-care-20130222 .

Honobob, I get what you're saying, but the "return" is only valuable if you end up needing long term care. And of course, you may not max out on benefits. I work with the elderly and NONE want to go to a nursing home. A high percentage don't even want to live in an ALF, and some that do regret selling their home and moving into one.

 ..... cover the average nursing home stay.

 
Actually my "return" includes home care at 50% so only $45,000 today and $113,000 twenty years from now.  My Dad needed almost ten years of LTC.  With my help he only needed 5 months in a SNF and 9 years in my home with just daycare expense.  Shortest months you'll ever see is when you're paying $5,000 a month to a SNF.  This is also NINE years that are NOT included in the statistics of "average" care needed.  Without my help he needed $600,000+ which he did NOT have.  On top of that $600,000 he needed money for doctors and medications.  He would also need to pay for such basics as laundry and, fer craps sake a TV!  SNF are NOT Club Med. 

My benefit is lifetime so there is no cap.  I have NO desire to use any of this but for the mere price of about a pack of cigarettes a day I have had over 5,000 days of blissful coverage.  Who is carrying liability coverage on their house or car thinking they've got to defend a lawsuit to get a "return"? 

I am NOT concerned about covering the "average" stay.  In fact, I can cover that now but then most all my money would be going to the SNF.  I want to cover the extended stay and have the ability to use "my" money to make that time as good as it can possibly be.  Basic living in a SNF is not that great.  SNF plus say, another $50,000-$100,000 a year can actually be tolerable.  Think private room, massages, COMPANY! (paid for or not company is good), better food and day trips.  Medicaid won't let you out the door.

When my Father was in a SNF I was there every day, he was supposed to die in less than six months! He was private pay and I had a job where I could take him to lunch and he could ride with me for some of my job.  In probably less than 30 days I was identified by the *"walkers" as a facilitator to the "outside".  They were up and about and wanted to go back home or just "outside".  They would follow me in my visits to the staff and my Dad and ask me to take them.  I'm sure family visited but even if they wanted to they could NOT take them anywhere if they were on Medicaid.  SUCKS.  I agree, NO ONE wants to be in a nursing home.  Nursing home on Medicaid?  Seriously?

*From the Walking Dead,  I'm doing a Netflix marathon.

jba302

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Re: Mustachians and LTC Insurance
« Reply #18 on: February 05, 2014, 07:57:58 PM »
According to NAIC, the loss ratio on LTC policies needs to be at least 60%, but I doubt you see them being much higher. Most LTC policies are absolutely worse than self-insure options, especially when their rates can adjust so readily and without reason. Unless you have a strong family history of Alzheimer's or something to weight you in that direction.

Now all that being said, I have an LTC policy, my company pays the premiums and I pay the tax burden which is like 5 dollars a month. That seems worth it.

honobob

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Re: Mustachians and LTC Insurance
« Reply #19 on: February 05, 2014, 08:14:40 PM »
Honobob, I only got one quote from one of Dave Ramsey's ELPs, but it was more than a few thousand and there were a lot of exclusions. Now if it was a policy like Nord's dad, it would be different. Once we reach our retirement goal, hopefully in three years, I might revisit the option. I do think I would want a spousal benefit or transferable policy. Can't remember the exact words. Right now all extra is going to investments and I'm hyper focused on saving as much as we can before my dh retires. I'll continue to work, so our savings can continue to grow.
You should not make a decision based on ONE quote.  My policy has NO exclusions.  What kind of exclusions are you talking about?  Exactly how much are you talking about for what amount of coverage? 
1.  You have to purchase in today's market.  You can't be comparing to what someone got years ago.  When I bought my policy there were tons of people that could have done the same thing.  Those that didn't NOW say how lucky I was to buy when I did.  It was a HARD decision then but the best that could be made.  Was it LUCK that I made the decision?  Remember, TODAY is tomorrow's good ole days.
2.  Three Years!  What's gonna change?  About the only thing is that the decision WILL be made for you.  You will no longer qualify at any price.
3.  How is saving $3,000-4,000-5,000 a year for investments today going to impact a LTC PLAN today?  Pretty much just means the SNF will collect more from you and save the State some cash.  Thanks from a taxpayer.

honobob

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Re: Mustachians and LTC Insurance
« Reply #20 on: February 05, 2014, 08:19:21 PM »
I posted this in response to a slightly different question earlier today. Since it applies even more directly to your question, I cut and pasted it here:

As to Long-Term-Care Insurance, I think it's over-rated.  ... However, if you're a good saver, you can put those premiums to work in your 'stache and end up with plenty of money, should the need arise.
  Long Term Care Insurance? No, thank you.
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Diane C.  Would you please detail this "good saver" plan?  What's it gonna take to be paying even $225,000 a year 20 years from now for 2-3-4-5-6 years? 

honobob

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Re: Mustachians and LTC Insurance
« Reply #21 on: February 05, 2014, 08:22:17 PM »
  Most LTC policies are absolutely worse than self-insure options

 
Which is?  Medicaid?  That like saying your early retirement plan is collecting SS at 62!

honobob

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Re: Mustachians and LTC Insurance
« Reply #22 on: February 05, 2014, 08:32:20 PM »
Medicaid will not let you out the door for lunch? That hasn't matched my reality. The rule is that home doesn't get paid if the patient isn't in the bed at night. In most states they are required to hold the bed (google therapeutic leave) for you for 7-30 days (depends on the state).

 
I'll back track on this as my father was NEVER on MediCal, I believe the same as Medicaid.  It was when he temporarily went under Medicare that he was supposed to NOT leave the facility and was supposed to be in the "Medicare" bed.  We went out and he was never forced to leave his private pay bed.  I was led to believe that anything other than private pay was restricted to the grounds.  Either way if you only have $30.00 a month cash and I have $5,000 I think my lunch options are going to be better.

Nords

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Re: Mustachians and LTC Insurance
« Reply #23 on: February 05, 2014, 08:51:08 PM »
I posted this in response to a slightly different question earlier today. Since it applies even more directly to your question, I cut and pasted it here:

As to Long-Term-Care Insurance, I think it's over-rated. Yes, long term care can be expensive. However, if you're a good saver, you can put those premiums to work in your 'stache and end up with plenty of money, should the need arise. I believe that there is a lot of fear-mongering among those who sell LTCI. Nobody wants to get old, be alone, sick and broke, so insurers prey on those fears. If you're Mustachian, you are far less likely to be without resources and as a result, can repel fear-mongerers with ease and confidence.

I have a LOT of older friends and of all the ones who have died, only one needed long-term care, because she had Alzheimer's. Not even remotely suggesting that this is a scientific study. What I am suggesting is that if you have saved enough money, you can self-insure. Why give the money to an insurance company, when you can keep it under your own control?  Yes, shit can happen and it can be expensive, but there other ways to cover it. More important, IMHO, is insuring against anything that interferes with your ability to earn a living before you've achieved FIRE. Disability insurance? YES, please. Long Term Care Insurance? No, thank you.
Without getting into the personalities posting on this thread, I'll say that your perspective is shared by fiduciaries and actuaries but does not always satisfy the emotional behavioral psychology side of the issue.  While many on this board could probably manage the actions required to self-insure, they wouldn't sleep very well at night.  Ironically many of those comforting LTC policies, even if they boosted their premiums by 50%-100%, may still not be able to pay out the full amount of their claims.  Until that (admittedly very rare) calamity happens we can have faith in their financial stability, their reserves, and the state insurance regulators. 

I know that long-term care insurance was very much on Dad's mind during the last 30 years because it's one of the Alheimer's conversational loops that he replays every 10 minutes.  But when he learns (for the 10,000th time) that he took care of himself with a great LTC policy, he's tremendously relieved all over again.

If a couple million policyholders like my Dad filed claims on John Hancock all at the same time, I'd be very concerned.  Heck, their bureaucracy is so bloated & inefficient that it's a miracle they're still paying out on his claim.  In fact, this month's payment concerns me because it looks like they've boosted it for their annual inflation increase, and that makes it the 21st of their 20 annual inflation increases.  However the policy has a total payout cap and they don't appear to have changed the cap, so I'm just going to let this run until it hits its limit. 

Honobob, I only got one quote from one of Dave Ramsey's ELPs, but it was more than a few thousand and there were a lot of exclusions.
Eeeeuw.  I hope you ran away fast.
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« Last Edit: February 05, 2014, 08:53:05 PM by Nords »

bogart

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Re: Mustachians and LTC Insurance
« Reply #24 on: February 05, 2014, 09:16:21 PM »
even if they wanted to they could NOT take them anywhere if they were on Medicaid. 

My dad is on Medicaid, and taking him places is no problem (well, it's plenty of problems, but not because of the Medicaid.

Medicare will cover short-terms stays (up to 3 months, IIRC) in a nursing home to recover from a crisis that involved hospitalization of at least 3 days.  My dad has used this twice, once after a stroke and once after a broken hip.  The thing is, to use this benefit, you have to be "getting better" -- benefiting from PT or whatever -- but you also have to have a certain level of disability (you have to need to get better).  So if you are too mobile, or conversely, if you are too incapable, you won't get this benefit even if you could qualify.  My guess is that these are the folks you were perceiving as not being allowed to go out to lunch (though in my experience it was fine for me to take my dad out e.g. to lunch when he was in those circumstances, but not OK for him to arrange his own transport to go somewhere, which he was trying to do toward the end of the recovery from the stroke). 

Dicey

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Re: Mustachians and LTC Insurance
« Reply #25 on: February 05, 2014, 11:33:57 PM »
Diane C.  Would you please detail this "good saver" plan?  What's it gonna take to be paying even $225,000 a year 20 years from now for 2-3-4-5-6 years?

Honobob, for fun, go to Bankrate.com and plug in the following numbers (or any others that please you). You'll see that $1M invested now for 20 years at a 7% return with a 3% inflation factor and a 15% tax rate will equal about 3.2 million. Yeah, I can handle that. And yes, if you start saving young and don't do anything silly like prepaying your mortgage without fully funding all available retirement options, you can have that much too. If you get traction when you're young, it's actually remarkably within reach.

Note: Please don't assume that I only have $1M. Just using it 'cause it's a lovely, lovely round number.

Workinghard

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Re: Mustachians and LTC Insurance
« Reply #26 on: February 06, 2014, 05:32:39 AM »
Diane C, I love the calculators available at the website! Yesterday I asked my brother, who is mathematically adept, a "which would be better" question. The calculators confirmed his answer. Thanks again for posting!

jba302

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Re: Mustachians and LTC Insurance
« Reply #27 on: February 06, 2014, 05:49:26 AM »
Which is?  Medicaid?  That like saying your early retirement plan is collecting SS at 62!

Self insure by investing the premiums that would have paid for an LTC policy through a self-directed account, or allocating a component of a large investment account to LTC care.

foobar

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Re: Mustachians and LTC Insurance
« Reply #28 on: February 06, 2014, 08:10:11 AM »
SS will pay me 2200/month at 62. If I can live on 25k/yr, that is more than enough. As far as the 35 bucks, you do what everyone else does. You give away assets to your kids (outside the look back window) and have them take you out to lunch with that cash.

The thing with nursing home insurance is that there are a lot of big winners and a ton on losers. If you go there 5 years, yeah LTC insurance is going to be a win. On the other hand half the people never make and of the half that makes it, half of them die in 6 months. In those cases medicare (not caid) will cover a good portion of the treatment (it is something like 20 days after hospitalization and another 80 days after that.)

  Most LTC policies are absolutely worse than self-insure options

 
Which is?  Medicaid?  That like saying your early retirement plan is collecting SS at 62!

honobob

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Re: Mustachians and LTC Insurance
« Reply #29 on: February 06, 2014, 08:24:04 AM »
Diane C.  Would you please detail this "good saver" plan?  What's it gonna take to be paying even $225,000 a year 20 years from now for 2-3-4-5-6 years?

Honobob, for fun, go to Bankrate.com and plug in the following numbers (or any others that please you). You'll see that $1M invested now for 20 years at a 7% return with a 3% inflation factor and a 15% tax rate will equal about 3.2 million. Yeah, I can handle that. And yes, if you start saving young and don't do anything silly like prepaying your mortgage without fully funding all available retirement options, you can have that much too. If you get traction when you're young, it's actually remarkably within reach.

Note: Please don't assume that I only have $1M. Just using it 'cause it's a lovely, lovely round number.
So the Diane C "good saver" LTC plan is:

1.  Have $1,000,000.
2.  Leave untouched for 20 years earning 7%.
3.  Now you have $3.2 million which will provide only 15 years of LTC assuming your rate of return will drop to 5% because you'll need to be more liquid (was the 7% really realistic?) and assume the LTC cost will also increase 5%.  Now your LTC fund is totally depleted and you're on Medicaid.

The only quibble I would have would be with number 1 and number 2. 

Now over that same time period I am spending only $60,000 and that is only in 240 monthly installments.  So I have $940,000 of the million to do with as I please.  If I just invested it like you I'd probably have close to $3,000,000.  So now 20 years later I need LTC and my insurance will pay the $225,000 plus the 5% annual increase FOREVER.  And..and I have almost $3,000,000 FUN money. 

Hmmm...exactly how are you sticking it to the insurance industry? 

honobob

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Re: Mustachians and LTC Insurance
« Reply #30 on: February 06, 2014, 08:45:46 AM »
  As far as the 35 bucks, you do what everyone else does. You give away assets to your kids (outside the look back window) and have them take you out to lunch with that cash.

 
 

LOL

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Re: Mustachians and LTC Insurance
« Reply #31 on: February 06, 2014, 01:22:05 PM »

 

Self insure by investing the premiums that would have paid for an LTC policy through a self-directed account, or allocating a component of a large investment account to LTC care.
Sounds sensible, but what is your coverage in year 5?  What about year 10?  Dang, how long do I half to live for this thing to EVER pay out?  It's always about the math. 

skinnyindy

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Re: Mustachians and LTC Insurance
« Reply #32 on: February 06, 2014, 01:51:31 PM »
We took care of my mom (a little) and dad (a lot) for 7 years. LTC insurance would have been so good to have but instead we lived with out many things and paid for things with my mom's life insurance. There was almost constant chaos and I got swore at and hit daily while changing his poopy diapers. In the end he went to hospice for free and died there but his first place was a hell hole but people were stuck there. The second one was great and still free due only to his retirement benefits, not Medicare or Medicaid. Check the rules for Medicaid regularly, we got to save his house because we took care of him for so long.  Financially it worked out but these past years of care giving were very hard and we gave up a lot. I only hope that my children will forget hearing him yell and throwing things at me. You might think that cash in hand is great but when you don't know how long it has to last, it is hard. There are many folks 100 + years old in nursing homes. And though my husband works three jobs we won't be able to self insure so may get LTC insurance. We don't have a million to invest. Please don't critique we did the best we could. P.s. Most family members don't help, the job goes to one child and everyone else does nothing. That is not only what I have seen but what health professionals have told me. 

jba302

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Re: Mustachians and LTC Insurance
« Reply #33 on: February 06, 2014, 04:28:54 PM »
Sounds sensible, but what is your coverage in year 5?  What about year 10?  Dang, how long do I half to live for this thing to EVER pay out?  It's always about the math.

Yes, you are right. It can be extremely difficult / impossible to accurately do this type of projection. It can also be very burdensome to not be covered properly in the event that you need this kind of coverage. I just want make sure there's a good understanding of LTC insurance, that is all. If a well informed calculation results in a policy being appropriate, so be it. However, it is most likely better to save up the money on your own, especially when the loss ratios are so low.

Math wise, it's always preferable to hold the burden of loss unless it's legally mandatory (auto liability) or you cannot handle the financial repercussions of loss (a house is a good example). Even when you have a loss you are only indemnified for the value of the loss, you still are down premiums.

Workinghard

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Re: Mustachians and LTC Insurance
« Reply #34 on: February 06, 2014, 05:00:14 PM »
Skinnyindy, it's extremely difficult taking care of elderly parents if you don't have medical background especially if Alzheimer's/dementia is involved.  Kudos to you for taking care of them. Rather than the yelling or throwing things, I'm sure your kids will remember the sacrifice you made to care for their grandparents. It will give them a greater appreciation of things. Course if they're young, they won't remember anything!

We took care of my mom (a little) and dad (a lot) for 7 years. LTC insurance would have been so good to have but instead we lived with out many things and paid for things with my mom's life insurance. There was almost constant chaos and I got swore at and hit daily while changing his poopy diapers. In the end he went to hospice for free and died there but his first place was a hell hole but people were stuck there. The second one was great and still free due only to his retirement benefits, not Medicare or Medicaid. Check the rules for Medicaid regularly, we got to save his house because we took care of him for so long.  Financially it worked out but these past years of care giving were very hard and we gave up a lot. I only hope that my children will forget hearing him yell and throwing things at me. You might think that cash in hand is great but when you don't know how long it has to last, it is hard. There are many folks 100 + years old in nursing homes. And though my husband works three jobs we won't be able to self insure so may get LTC insurance. We don't have a million to invest. Please don't critique we did the best we could. P.s. Most family members don't help, the job goes to one child and everyone else does nothing. That is not only what I have seen but what health professionals have told me.

Dicey

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Re: Mustachians and LTC Insurance
« Reply #35 on: February 06, 2014, 06:47:35 PM »
Diane C.  Would you please detail this "good saver" plan?  What's it gonna take to be paying even $225,000 a year 20 years from now for 2-3-4-5-6 years?

Honobob, for fun, go to Bankrate.com and plug in the following numbers (or any others that please you). You'll see that $1M invested now for 20 years at a 7% return with a 3% inflation factor and a 15% tax rate will equal about 3.2 million. Yeah, I can handle that. And yes, if you start saving young and don't do anything silly like prepaying your mortgage without fully funding all available retirement options, you can have that much too. If you get traction when you're young, it's actually remarkably within reach.

Note: Please don't assume that I only have $1M. Just using it 'cause it's a lovely, lovely round number.
[/quote]
_________________________________________________________________________________________________________________
Diane C here: I can't get the quotes to work correctly. This is honobob's reply:

So the Diane C "good saver" LTC plan is:

1.  Have $1,000,000.
2.  Leave untouched for 20 years earning 7%.
3.  Now you have $3.2 million which will provide only 15 years of LTC assuming your rate of return will drop to 5% because you'll need to be more liquid (was the 7% really realistic?) and assume the LTC cost will also increase 5%.  Now your LTC fund is totally depleted and you're on Medicaid.

The only quibble I would have would be with number 1 and number 2. 

Now over that same time period I am spending only $60,000 and that is only in 240 monthly installments.  So I have $940,000 of the million to do with as I please.  If I just invested it like you I'd probably have close to $3,000,000.  So now 20 years later I need LTC and my insurance will pay the $225,000 plus the 5% annual increase FOREVER.  And..and I have almost $3,000,000 FUN money. 

Hmmm...exactly how are you sticking it to the insurance industry?
_________________________________________________________________________________________________________________


Honobob, I knew I was approaching quicksand with you when you read my words "good saver" as "good saver plan". Nonetheless, I feel my point is a valid as any other, so I seriously considered your question and made a carefully-thought out response. Now you're calling it the "Diane C 'good saver' LTC plan" and using quotes? Are you the personality Nords seemed to be warning me about? (Thanks, Nords, I've got this one. You rock.)

Some additional corrections to your erroneous assumptions:

1. I never said anything about "sticking it to the insurance industry". Quite the opposite. I strongly advocated disability insurance. Did you miss that part?

2. I specifically stated that I have more than $1M in assets. I chose $1M for my example, because it is a "lovely, lovely round number" and the math is easy.

3. You chose to make fun of $1M. Let me tell you again from experience, if you start early and keep at it long enough, IT'S NOT THAT HARD! I can't help it if you don't believe it, the facts are the facts. If you don't believe in yourself and your ability to achieve this via Mustachianism, why are you here? BTW there's an awesome thread elsewhere on the forums about the first million being the hardest. It's inspiring reading, I recommend it.

4. The 7% was in the Bankrate calculator when I pulled it up. Seemed historically reasonable to me, so I went with it. Bankrate allows you to put in any rate of return you want. I'd invite you to try it, but I already have and you chose to sneer instead.

5. Using my original number of $3.2M and your figures of $225k/year* times 6 years equals $1.35M, simple math says the remainder is $1.85M.  And that's without considering that I (or my family) wouldn't pay out the $1.35M all at once. My army of little green soldiers will continue to fight for me, so $1.85M is a very conservative remainder. In the interim, I have all the rest of my significant assets to call "fun money". Those are your words. I call it "Freedom Money". I used to call it "Fuck You Money", but since I've become FIRE, I've mellowed a bit. Oh, and the "20 years" was your number, not mine. Plus, you changed the LTC expectation from "2-3-4-5-6 years" to 20 years. Quicksand, honobob, be careful, you're walking in quicksand.

6. If my Mustachian ways pay off in that I never need LTC, I get to spend/keep/bequeath even more money, woo-hoo! Why? Because it's under MY control, not some insurance company that doesn't consider me anything more than an enemy should I need to make a claim.

7. Never gonna qualify for Medicaid, never gonna eat cat food and I never toss and turn at night worrying about this shit! Oh, I will freely admit I used to, but when I hit my first million, all those worries fell away, as if by magic. Feels great!

Honobob, this forum exists for the free exchange of ideas. If your goal is to belittle others who are ahead of you on life's path and willing to share their experience and perspective, what will you ever learn from your time spent here?

*P.S. - WTF? What Mustachian worth their salt is going to pay $225k/year for long term care? What kind of place it that? Do they serve your food on gold-plated trays? Why, after a lifetime of balanced thrift and fun, would I suddenly turn into a total spendthrift? That number is like the one that says it takes $1M to raise a kid. Mustachians recognize that number as 100% bullshit.



Workinghard

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Re: Mustachians and LTC Insurance
« Reply #36 on: February 07, 2014, 04:16:31 AM »
Diane C, I totally agree with you about the 1m. People think it's impossible, but it's not! And it's never too late to start. My dh and I should be there in a few years. We've been married 22 years and he owed money when we got married.

It's our choices that have delayed FI to the standard age.  We started late, we paid for our son's college, I was out of the workforce 10 years while we cared for foster children, and since I've been back to work we give ~1k a month. In addition, until I started back to work, we were way more conservative with our investments.

I'm slowly rebalancing our portfolio based on a spreadsheet my brother set up for me. He's looking at 4.5m when he retires. However, he's had an exceptionally high income.  If we can do it on a "regular" income, anyone can. It's all about choices.

foobar

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Re: Mustachians and LTC Insurance
« Reply #37 on: February 07, 2014, 07:12:00 AM »
225k 20 years from know is a reasonable amount for 1 year in a LTC facility. But it is 20 years from now. Your 1 million dollars in todays money will be like 4-8 million then.

The question then come is it cheaper to pay 2k (+increases)/yr for 20+ years or pay out of pocket. If your the median 6 month stay, out of pocket is much cheaper. If you last 1- years (something like <5% of people) then insurance will be cheaper. Does this matter? Well if you want to leave money to your kids, charity,... then maybe.  As far as running out of money in 15+ years, it is a pretty much a non issue. You aren't going to get kicked out of your facility. In general what happens is that you end up having to share a room. Not exactly something that keeps me up at night.


Diane C.  Would you please detail this "good saver" plan?  What's it gonna take to be paying even $225,000 a year 20 years from now for 2-3-4-5-6 years?

Honobob, for fun, go to Bankrate.com and plug in the following numbers (or any others that please you). You'll see that $1M invested now for 20 years at a 7% return with a 3% inflation factor and a 15% tax rate will equal about 3.2 million. Yeah, I can handle that. And yes, if you start saving young and don't do anything silly like prepaying your mortgage without fully funding all available retirement options, you can have that much too. If you get traction when you're young, it's actually remarkably within reach.

Note: Please don't assume that I only have $1M. Just using it 'cause it's a lovely, lovely round number.
_________________________________________________________________________________________________________________
Diane C here: I can't get the quotes to work correctly. This is honobob's reply:

So the Diane C "good saver" LTC plan is:

1.  Have $1,000,000.
2.  Leave untouched for 20 years earning 7%.
3.  Now you have $3.2 million which will provide only 15 years of LTC assuming your rate of return will drop to 5% because you'll need to be more liquid (was the 7% really realistic?) and assume the LTC cost will also increase 5%.  Now your LTC fund is totally depleted and you're on Medicaid.

The only quibble I would have would be with number 1 and number 2. 

Now over that same time period I am spending only $60,000 and that is only in 240 monthly installments.  So I have $940,000 of the million to do with as I please.  If I just invested it like you I'd probably have close to $3,000,000.  So now 20 years later I need LTC and my insurance will pay the $225,000 plus the 5% annual increase FOREVER.  And..and I have almost $3,000,000 FUN money. 

Hmmm...exactly how are you sticking it to the insurance industry?
_________________________________________________________________________________________________________________


Honobob, I knew I was approaching quicksand with you when you read my words "good saver" as "good saver plan". Nonetheless, I feel my point is a valid as any other, so I seriously considered your question and made a carefully-thought out response. Now you're calling it the "Diane C 'good saver' LTC plan" and using quotes? Are you the personality Nords seemed to be warning me about? (Thanks, Nords, I've got this one. You rock.)

Some additional corrections to your erroneous assumptions:

1. I never said anything about "sticking it to the insurance industry". Quite the opposite. I strongly advocated disability insurance. Did you miss that part?

2. I specifically stated that I have more than $1M in assets. I chose $1M for my example, because it is a "lovely, lovely round number" and the math is easy.

3. You chose to make fun of $1M. Let me tell you again from experience, if you start early and keep at it long enough, IT'S NOT THAT HARD! I can't help it if you don't believe it, the facts are the facts. If you don't believe in yourself and your ability to achieve this via Mustachianism, why are you here? BTW there's an awesome thread elsewhere on the forums about the first million being the hardest. It's inspiring reading, I recommend it.

4. The 7% was in the Bankrate calculator when I pulled it up. Seemed historically reasonable to me, so I went with it. Bankrate allows you to put in any rate of return you want. I'd invite you to try it, but I already have and you chose to sneer instead.

5. Using my original number of $3.2M and your figures of $225k/year* times 6 years equals $1.35M, simple math says the remainder is $1.85M.  And that's without considering that I (or my family) wouldn't pay out the $1.35M all at once. My army of little green soldiers will continue to fight for me, so $1.85M is a very conservative remainder. In the interim, I have all the rest of my significant assets to call "fun money". Those are your words. I call it "Freedom Money". I used to call it "Fuck You Money", but since I've become FIRE, I've mellowed a bit. Oh, and the "20 years" was your number, not mine. Plus, you changed the LTC expectation from "2-3-4-5-6 years" to 20 years. Quicksand, honobob, be careful, you're walking in quicksand.

6. If my Mustachian ways pay off in that I never need LTC, I get to spend/keep/bequeath even more money, woo-hoo! Why? Because it's under MY control, not some insurance company that doesn't consider me anything more than an enemy should I need to make a claim.

7. Never gonna qualify for Medicaid, never gonna eat cat food and I never toss and turn at night worrying about this shit! Oh, I will freely admit I used to, but when I hit my first million, all those worries fell away, as if by magic. Feels great!

Honobob, this forum exists for the free exchange of ideas. If your goal is to belittle others who are ahead of you on life's path and willing to share their experience and perspective, what will you ever learn from your time spent here?

*P.S. - WTF? What Mustachian worth their salt is going to pay $225k/year for long term care? What kind of place it that? Do they serve your food on gold-plated trays? Why, after a lifetime of balanced thrift and fun, would I suddenly turn into a total spendthrift? That number is like the one that says it takes $1M to raise a kid. Mustachians recognize that number as 100% bullshit.
[/quote]

honobob

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Re: Mustachians and LTC Insurance
« Reply #38 on: February 08, 2014, 02:40:19 PM »
Diane C.  Would you please detail this "good saver" plan?  What's it gonna take to be paying even $225,000 a year 20 years from now for 2-3-4-5-6 years?
  I feel my point is a valid as any other, so I seriously considered your question and made a carefully-thought out response.
 Some additional corrections to your erroneous assumptions:

 
 
2.   I chose $1M for my example, because it is a "lovely, lovely round number" and the math is easy.

 

4. The 7% was in the Bankrate calculator when I pulled it up. Seemed historically reasonable to me, so I went with it.
5. Using my original number of $3.2M and your figures of $225k/year* times 6 years equals $1.35M, simple math says the remainder is $1.85M.  And that's without considering that I (or my family) wouldn't pay out the $1.35M all at once. My army of little green soldiers will continue to fight for me, so $1.85M is a very conservative remainder. In the interim, I have all the rest of my significant assets to call "fun money". Those are your words. I call it "Freedom Money". I used to call it "Fuck You Money", but since I've become FIRE, I've mellowed a bit. Oh, and the "20 years" was your number, not mine. Plus, you changed the LTC expectation from "2-3-4-5-6 years" to 20 years. 

 


Diane C, You've thrown a lot out here and I'll respond to all but want to keep it compartmentalized as it seems that you are not comprehending what I have posted.

1.  I don't see how you can make the claim that you really thought this thru when you admit you used a default number in Bankrate because it seemed reasonable, used $1,00,000 because it was a lovely number and then have NO clue what the goal (expense of $225,000) was.  You might want to google medical inflation or hell JUST inflation in your case.  I see you didn't bother to thank foobar for pointing out your error.

2.  Earlier you stated you could put "those premiums to work ...and end up with plenty of money, should the need arise".  Diane C, where are those calculations?   I think everyone here would like to see how your little green guys can take a few thousand per period and come up with Hundreds of Thousands per period 20 years from now.  You would need to understand what the expense is TODAY (for the insurance) and make an educated guess at what the CARE would cost in say 20 years.  You do realize under this "DIANE C" plan your first year coverage is about zip?  But I am giving people the benefit of the possibility that you probably won't need the CARE for 20+ years although that is actually when the need would put MOST people into bankruptcy.

3.  Then the "Diane C" plan morphed into starting with $1,000,000 earmarked for LTC.  I didn't sneer at that.  In fact I showed how the "HonoBob" plan started with the same $1,000,000 (mine has $940,000 that is NOT earmarked and I have control that included spending it as well).  Except in my plan I have coverage from day one and if we both needed the CARE at some point I'd have almost $3,000,000 for "fuck you" money and you'd be spending $225,000 annually out of your $3,200,000.  See how after only one year you're down to under $3,000,000.  NOW guess who is going to be in CONTROL of your money?  Yep, little green men gotta new boss.  The Facility and the govmint are going to be earmarking about 5 years worth of YOUR money.  That's a sinking feeling,...quicksand?

4.  Actually pretty much any way you look at it the "HonoBob" plan blows the doors off the "Diane C" plan...unless...unless your plan really is just don't NEED LTC and save the premiums.  Good Luck with that plan.

5.  As far as changing the parameters it was you that thoughtlessly threw out the $1,000,000.  I gave you credit that it would cover you for about 15 years.  Did I tell you my plan was lifetime?  You did NOT show calculations for 2-3-4-5-6 years. 

Dicey

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Re: Mustachians and LTC Insurance
« Reply #39 on: February 08, 2014, 04:42:52 PM »
Why so sensitive, honobob? I'm perfectly happy for you to follow your own plan. I'm also content to stick to mine. Since no two people are exactly alike, perhaps your plan has enough chance of being successful as mine. I do worry that you appear to believe that LTC insurance will pay for all of your expenses. If you believe that, you may be in for an unhappy awakening. Can we agree that there is no single answer, please?

One of the most unexpected things about achieving FIRE is how so many stresses have just melted away. All the things I worried about for so long and planned for endlessly don't even cross my mind any more. Since I apparently didn't make it clear enough to you,  I guess I'll have to shout to make this point. I HAVE MORE THAN ONE MILLION DOLLARS! Lots more. Since it's well diversified, I expect my investments will grow roughly on pace with the cost of LTC. Should I ever need it, the money will be there.

I can't tell you how great it is to be living happily ever after, honobob. I hope you get there, too. Cheers!

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Re: Mustachians and LTC Insurance
« Reply #40 on: February 08, 2014, 05:32:20 PM »
Why so sensitive, honobob? I'm perfectly happy for you to follow your own plan. I'm also content to stick to mine. Since no two people are exactly alike, perhaps your plan has enough chance of being successful as mine. I do worry that you appear to believe that LTC insurance will pay for all of your expenses. If you believe that, you may be in for an unhappy awakening. Can we agree that there is no single answer, please?

One of the most unexpected things about achieving FIRE is how so many stresses have just melted away. All the things I worried about for so long and planned for endlessly don't even cross my mind any more. Since I apparently didn't make it clear enough to you,  I guess I'll have to shout to make this point. I HAVE MORE THAN ONE MILLION DOLLARS! Lots more. Since it's well diversified, I expect my investments will grow roughly on pace with the cost of LTC. Should I ever need it, the money will be there.

I can't tell you how great it is to be living happily ever after, honobob. I hope you get there, too. Cheers!
Not sensitive at all.  Why are you trying to make this personal instead of addressing the flaws in your plan that I pointed out?
« Last Edit: February 08, 2014, 05:44:29 PM by honobob »

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Re: Mustachians and LTC Insurance
« Reply #41 on: February 08, 2014, 05:38:58 PM »
Also, what is your contribution to this topic?  As some that have contacted me directly think and as your last post supports it seems to be "Diane C has lots of lovely, lovely millions and all could learn from her because she is ahead on the path of live.  Yeah we all agree that that seems pretty arrogant.  Oh and to piss on Honobob for whatever reason. 

It's out there but if you want to weigh in on this directly it's bobbob1962@aol.com

Oh, are you really FIRE?  People are telling me you are a Stay at Home Spouse.
« Last Edit: February 08, 2014, 05:43:54 PM by honobob »

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Re: Mustachians and LTC Insurance
« Reply #42 on: February 08, 2014, 06:27:50 PM »
 




 

Some additional corrections to your erroneous assumptions:

1. I never said anything about "sticking it to the insurance industry". Quite the opposite. I strongly advocated disability insurance. Did you miss that part?

As to Long-Term-Care Insurance, I think it's over-rated.  I believe that there is a lot of fear-mongering among those who sell LTCI. Nobody wants to get old, be alone, sick and broke, so insurers prey on those fears.   can repel fear-mongerers with ease and confidence.

 . Why give the money to an insurance company, when you can keep it under your own control?   Long Term Care Insurance? No, thank you.


   not some insurance company that doesn't consider me anything more than an enemy should I need to make a claim.


Yeah, not sure where I got that idea ;-(

arebelspy

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Re: Mustachians and LTC Insurance
« Reply #43 on: February 08, 2014, 06:41:48 PM »
MODERATOR NOTE: Locking thread.  I will sort out the issues with who is violating what site rules and discuss with the other mods what consequences there will be, if any.

Anyone interested in the topic, feel free to start a new thread, but please stop being dicks. 

Thanks!
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