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Dec 14

America’s Money Class

Suze Orman Speaks Out About Long-Term Care Insurance

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  1. Frances Jones ..Dorothy St John

    My Aunt Dorothy St John has belonged since 1995 and made her payments regularly. However when Dr. Allison said she needed 24hr care I, as her trustee and power of attorney France Jones, got together the care she needed her birthday 5/21/18 . We applied 3 years ago or maybe longer and were refused because they would not except the home care we had for her. She is now 98 years old and still paying for her long term care as at her age I won’t change faces of people that are caregivers. Its doubtful that the long term care will ever help her its very expensive considering it of no help for her. I only wish they had told us that they need to approve everything. I worked for Smud and they were explaining it to us and never said that they had to choose who you hire for long term care to help . Frances Jones…916 422 7407

    1. Phyllis Shelton

      Frances, I’m so sorry you have had to go through this stress. Some policies today do allow informal caregivers to provide care. On ones that don’t, some of my clients have paid for the caregivers they like to go through the training to become a home health aide, sometimes known as a certified nurse assistant (CNA) and then the insurance company will pay. Even with policies that pay informal caregivers or just provide cash (the most flexible), there is still a requirement to put together a 12 month plan of care based on the needs of the patient. That is a federal requirement, not an insurance company requirement, and it is part of what is required to be approved for benefits to start. One must be expected to need help with at least two of the basic six activities of daily living for at least 90 days or be cognitively impaired to the point where the person can’t stay alone safely. All of that is Federally required since 1/1/97 to ensure that the benefits are tax-free. A suggestion I have for you with your aunt is to ask the insurance company if there is an alternate plan of care provision in the policy, as that could allow the company to pay benefits outside of the contract if it makes sense, and in this case, I think it would. If you would like my help to determine if such a clause exists, please fax the Schedule of Benefits from your aunt’s policy to me at 615-590-0307.

  2. J. Swift

    Ms. Shelton,

    Recently attended financial planning seminar of a reputable financial planning company I have an account with. One of the insurances discussed was a $500,000 “Combined Life Insurance and Long Term Care” policy with the option to use up to $300,000 for long term care.

    What are pros and cons of a combined policy?

    I currently have a separate small Long Term Care policy with lifetime maximum benefit of $109,500 purchased 2011 at age 61. It is costing me $1,300 a year and I now realize the benefit is not adequate. I have a separate $200,000 life insurance policy .

    I look forward to your reply. Thank you.

    1. Phyllis Shelton

      There are advantages with a combined policy if you structure it correctly to provide inflation coverage. 66 is still young and while you could be hit by a drunk driver or suffer a stroke at any time, you have to plan so that your LTC coverage will be adequate in 20 years or longer if you have longevity on your side. A really nice assisted living facility that might cost $6000 a month today can easily cost $16,000 a month in 20 years, using 5% compound inflation. So just because a combo plan provides $300,000 in LTC benefits, what really matters is how much it will pay on a daily or monthly basis when you need care. Before you give up the policy you bought in 2011, just know you could buy a combo plan and build on that to get what you need. Another option is to exchange an existing life insurance policy with cash value for a life/ltc policy, and that will lower the premium. An advantage of the combo plan is that you don’t ever have to worry about a rate increase. Another advantage is if you don’t need care, the death benefit goes to a beneficiary. You can sign up for a no-obligation consultation if you would like to see if we can provide a solution that fits your needs by completing the short questionnaire here.

  3. Esther Brooks

    I have federal long term health care insurance since 10/01/2005. I stated at age 55. I am now 67. My daily benefit is $156.91, my benefit period is unlimited, my lifetime benefit is unlimited. I have an automatic compound inflation option of 4 %. My insurance carrier, John Hancock has sent me notice that to maintain my current coverage my rate will increase from $131.83 per month to $297.94 per month. They are offering me the following options: (1).Keep current coverage & pay premium increase $297.94 monthly(,2) Maintain life time benefit but Reduce future inflation % to 2.65% Automatic compound inflation option and pay partial increase of $214.88 monthly, or (3)Maintain life time benefit and reduce future inflationcoverage to 0.90 % ACIO for $131.83 monthly. What should I do? I can afford the current price increase but with my retirement and fixed income, I will not be able to afford many more premium hikes. My grandmother lived to be 99.

    1. Phyllis Shelton

      Take this rate increase if you can afford it Esther as you can always reduce benefits in the future. It’s still a good deal. If you pay the new premium of $297.94 and pay on it another 20 years, you will have spent $71,505 in premium. Your daily benefit in 20 years at 4% compound will be $343, which is $10,433 a month in benefits, or $104,333 a year. If you need the 4.5 years that women typically receive who have needed care longer than a year, you will have received over $420,000 in benefits that you only paid $71,505 for. I always ask the question, is it easier to find $297 a month, or would you rather find $5000 or more for a really nice assisted living facility or some home care?

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