Comments on: Riding the Line of Overcautiousness http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/ Simple, applicable personal finance advice for the modern world Sat, 21 Nov 2009 22:03:21 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: wanda http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-522545 wanda Tue, 17 Feb 2009 00:09:09 +0000 http://www.thesimpledollar.com/?p=3132#comment-522545 One more important comment, another writer referred to "Medicare" when I believe they intended "Medicaid". Simple way to distinguish these 2. Medicare is the health CARE insurance we all purchase now through payroll tax deductions and kicks in at 65. It is short term health care insurance, just like you have now, likely through your employer. It pays only for rehabilitation, skilled medical services under very strict criteria, and for a limited time. Medicaid, is an AID program for the indigent/needy..........it is a needs based health insurance program for the indigent of all ages. It was never intended to pay for those who can pay for themselves and the balanced budget act of a few years ago made it harder than ever to qualify for this benefit. Qualifications include amount of home equity, monthly income, and total assets. Each state varies somewhat, you can check with the county you live in to find out what the rules are there. Seniors who want Medicaid benefits most often have to receive these benefits in a nursing home of the state's choosing, losing the option to stay at home. One more important comment, another writer referred to “Medicare” when I believe they intended “Medicaid”. Simple way to distinguish these 2. Medicare is the health CARE insurance we all purchase now through payroll tax deductions and kicks in at 65. It is short term health care insurance, just like you have now, likely through your employer. It pays only for rehabilitation, skilled medical services under very strict criteria, and for a limited time. Medicaid, is an AID program for the indigent/needy……….it is a needs based health insurance program for the indigent of all ages. It was never intended to pay for those who can pay for themselves and the balanced budget act of a few years ago made it harder than ever to qualify for this benefit. Qualifications include amount of home equity, monthly income, and total assets. Each state varies somewhat, you can check with the county you live in to find out what the rules are there. Seniors who want Medicaid benefits most often have to receive these benefits in a nursing home of the state’s choosing, losing the option to stay at home.

]]> By: wanda http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-522366 wanda Mon, 16 Feb 2009 22:09:32 +0000 http://www.thesimpledollar.com/?p=3132#comment-522366 It is regrettable that many individuals who offer opinions for/against something do so with inadequate information.............there is much misinformation given in many of the preceding comments about long term care insurance. The most blatant is that it is "expensive". ...... ..expense is a relative thing! The dinner my husband and I enjoyed on February 14 at a pricey steak house to celebrate Valentines day was expensive relative to a meal at McDonald's. However, it was a bargain relative to buying the steak house. Cars are "expensive" yet I see no shortage of cars on the roads I travel every day! Expense is not the issue, one should be concerned with VALUE. Am I getting value for what I am spending. All insurance types are tools to leverage dollars and hedge risk. One must determine if it makes sense to let someone else cover the $6000/month fee that care costs today in many parts of the country (and which will double in 15 years) by paying an annual premium which is much less. One must also find a SPECIALIST in long term care planning with whom to have this discussion. The only real specialists on this subject in the US have the credentials, CLTC behind their name. This means they are "certified" by the Corporation for Certification of Long Term Care, and they were not only trained once, but maintain their training/knowledge ongoing. For most people, all premiums paid over their lifetime will be returned in 6-9 months of receiving long term care benefits, assuming benefit increase option (also called inflation protection) was a part of the plan. A very important piece of legislation which has been passed at a Federal Level, and which is being acted on state by state which is a GAME CHANGER for the purchase of long term care insurance addresses the issue of spending all of one's own assets and then becoming a ward of the state without insurance. Some states now grant dollar for dollar asset protection for owning private long term care insurance. Instead of having to spend your way to poverty (having less than $2000 to your name) the state will allow you to keep assets that are equal to the amount of benefits you have received from your private long term care insurance. The details of the law vary from state to state, and about 30 states still need to act, but with Medicaid ("aid to the poor") budgets going bust in many states, you can bet most states will follow suit and adopt this law, which establishes what are called "Partnership Long Term Care Plans". While the observation of one responder above was accurate in refering to the fact that men are less likely to need this protection than women, families currently caring for a male family member after a health care disaster would tell you statistics don't matter. The aging population and the catch 22 of modern medicine does support that 7 of 10 individuals in the US who reach age 65 will need some care at some point in their lifetime. I also think many people find this subject distateful becuse they interpret "long term care" to mean "nursing home care". NOT TRUE - long term care is when a person has lost independence with activities of daily living and needs help from another person to do basic activities, and will need that care for 3 months or longer. There are many Iraq war veterans who now meet this definition and get care at home. Couples who are fortunate enough to be advised by a long term care planning specialist may learn that there are some carriers that allow a single policy to cover both husband and wife. This more flexible plan means that benefit dollars can be used by the person who needs them, and significantly reduces the risk that benefits won't be used at all. Another option now available is a universal life insurance policy with a long term care rider. This type of coverage addresses the "what if I never use it" concern as the estate always wins..........either the estate receives a death benefit, or someone else pays for the individual's care needs, preserving the estate assets, or perhaps both. Long term care insurance is an important part of EVERY Financial Plan. If you work with a financial advisor who has not broached the subject with you, I would change to one who understands this component of the financil plan. If you are fortunate enough to work with an advisor who understands this, or has access to a planning specialist to consult with his clients, then you should perhaps listen to what these folks have to say. They can explain the way policies work, help you choose a reputable carrier, and help you navigate the underwriting process successfully. (If you wait until your health has begun to deteriorate, as often happens with age, you may become uninsurable.) A reputable advisor would never recommend more coverage than you need, or coverage that is affordable, and in fact should present you with a number of options for funding the premium. Wow........I have given you alot to chew on, but I do trust it is useful to one person. It is regrettable that many individuals who offer opinions for/against something do so with inadequate information………….there is much misinformation given in many of the preceding comments about long term care insurance. The most blatant is that it is “expensive”. …… ..expense is a relative thing! The dinner my husband and I enjoyed on February 14 at a pricey steak house to celebrate Valentines day was expensive relative to a meal at McDonald’s. However, it was a bargain relative to buying the steak house. Cars are “expensive” yet I see no shortage of cars on the roads I travel every day! Expense is not the issue, one should be concerned with VALUE. Am I getting value for what I am spending. All insurance types are tools to leverage dollars and hedge risk. One must determine if it makes sense to let someone else cover the $6000/month fee that care costs today in many parts of the country (and which will double in 15 years) by paying an annual premium which is much less. One must also find a SPECIALIST in long term care planning with whom to have this discussion. The only real specialists on this subject in the US have the credentials, CLTC behind their name. This means they are “certified” by the Corporation for Certification of Long Term Care, and they were not only trained once, but maintain their training/knowledge ongoing. For most people, all premiums paid over their lifetime will be returned in 6-9 months of receiving long term care benefits, assuming benefit increase option (also called inflation protection) was a part of the plan. A very important piece of legislation which has been passed at a Federal Level, and which is being acted on state by state which is a GAME CHANGER for the purchase of long term care insurance addresses the issue of spending all of one’s own assets and then becoming a ward of the state without insurance. Some states now grant dollar for dollar asset protection for owning private long term care insurance. Instead of having to spend your way to poverty (having less than $2000 to your name) the state will allow you to keep assets that are equal to the amount of benefits you have received from your private long term care insurance. The details of the law vary from state to state, and about 30 states still need to act, but with Medicaid (”aid to the poor”) budgets going bust in many states, you can bet most states will follow suit and adopt this law, which establishes what are called “Partnership Long Term Care Plans”. While the observation of one responder above was accurate in refering to the fact that men are less likely to need this protection than women, families currently caring for a male family member after a health care disaster would tell you statistics don’t matter. The aging population and the catch 22 of modern medicine does support that 7 of 10 individuals in the US who reach age 65 will need some care at some point in their lifetime. I also think many people find this subject distateful becuse they interpret “long term care” to mean “nursing home care”. NOT TRUE – long term care is when a person has lost independence with activities of daily living and needs help from another person to do basic activities, and will need that care for 3 months or longer. There are many Iraq war veterans who now meet this definition and get care at home. Couples who are fortunate enough to be advised by a long term care planning specialist may learn that there are some carriers that allow a single policy to cover both husband and wife. This more flexible plan means that benefit dollars can be used by the person who needs them, and significantly reduces the risk that benefits won’t be used at all. Another option now available is a universal life insurance policy with a long term care rider. This type of coverage addresses the “what if I never use it” concern as the estate always wins……….either the estate receives a death benefit, or someone else pays for the individual’s care needs, preserving the estate assets, or perhaps both. Long term care insurance is an important part of EVERY Financial Plan. If you work with a financial advisor who has not broached the subject with you, I would change to one who understands this component of the financil plan. If you are fortunate enough to work with an advisor who understands this, or has access to a planning specialist to consult with his clients, then you should perhaps listen to what these folks have to say. They can explain the way policies work, help you choose a reputable carrier, and help you navigate the underwriting process successfully. (If you wait until your health has begun to deteriorate, as often happens with age, you may become uninsurable.) A reputable advisor would never recommend more coverage than you need, or coverage that is affordable, and in fact should present you with a number of options for funding the premium.
Wow……..I have given you alot to chew on, but I do trust it is useful to one person.

]]> By: Courtney http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-522192 Courtney Mon, 16 Feb 2009 18:18:53 +0000 http://www.thesimpledollar.com/?p=3132#comment-522192 My mother-in-law was the primary earner for her household. She had an incident that left her permanently disabled, and in the hospital for a year. No, I'm not kidding - a year. Thank god she had good health insurance, and long-term-disability insurance. After she got out of the hospital, it took TWO YEARS for social security disability to kick in. That's the required waiting period under fedeal law. Of course, her job fired her, since she couldn't work. She had AFLAC coverage for hospitalization, as well. What were my in-laws to live on while she was in the hospital? Or at home, disabled, without income? You betcha my husband has LTD insurance. That's a no brainer in our household. As for LTC, the jury is still out on that one. My mother-in-law was the primary earner for her household. She had an incident that left her permanently disabled, and in the hospital for a year. No, I’m not kidding – a year. Thank god she had good health insurance, and long-term-disability insurance. After she got out of the hospital, it took TWO YEARS for social security disability to kick in. That’s the required waiting period under fedeal law. Of course, her job fired her, since she couldn’t work. She had AFLAC coverage for hospitalization, as well. What were my in-laws to live on while she was in the hospital? Or at home, disabled, without income?

You betcha my husband has LTD insurance. That’s a no brainer in our household.

As for LTC, the jury is still out on that one.

]]> By: Lou http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-518812 Lou Sat, 14 Feb 2009 03:18:31 +0000 http://www.thesimpledollar.com/?p=3132#comment-518812 My husband and i conscientiously spent a lot of our disposable income on additional professional education for each of us, on the theory that what is in your head can't be taken away from you. I was a college professor, 7 years from retirement, when a slate blackboard in my classroom (that's 4ft x 6ft x 1/2" of ROCK) came loose from the wall and landed on my head. "Moderate" traumatic brain injury ended my teaching career, my income and my contributions to my retirement fund. Long-term disability insurance was not a part of the benefits package at my university. Since there was no negligence on the part of the college, I was not eligible for Workers' compendation. Believe me, at your age, and with small children, you need long-term disability insurance. My husband and i conscientiously spent a lot of our disposable income on additional professional education for each of us, on the theory that what is in your head can’t be taken away from you. I was a college professor, 7 years from retirement, when a slate blackboard in my classroom (that’s 4ft x 6ft x 1/2″ of ROCK) came loose from the wall and landed on my head. “Moderate” traumatic brain injury ended my teaching career, my income and my contributions to my retirement fund. Long-term disability insurance was not a part of the benefits package at my university. Since there was no negligence on the part of the college, I was not eligible for Workers’ compendation. Believe me, at your age, and with small children, you need long-term disability insurance.

]]> By: Jerry http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-518091 Jerry Fri, 13 Feb 2009 15:31:38 +0000 http://www.thesimpledollar.com/?p=3132#comment-518091 @Chris #42 One huge reason people demonize financial (especially insurance) companies is because the manufacturer or reseller of Cheetos does not devote entire departments and legal teams to denying you your bag of Cheetos after you have paid for it. Insurance companies by definition make more money when they deny claims. In many documented cases, they deny clearly valid claims, knowing that a percentage of those people will not appeal. Of the many who appeal, roughly 200,000 per year, more than 1/3 are ruled in favor of the consumer. Many denied appeals do not necessarily lose on merit, but for other reasons. See the stats on the National Association of Insurance Commissioners website at https://eapps.naic.org/documents/cis_aggregate_complaints_by_coverage_types.pdf @Chris #42
One huge reason people demonize financial (especially insurance) companies is because the manufacturer or reseller of Cheetos does not devote entire departments and legal teams to denying you your bag of Cheetos after you have paid for it. Insurance companies by definition make more money when they deny claims. In many documented cases, they deny clearly valid claims, knowing that a percentage of those people will not appeal. Of the many who appeal, roughly 200,000 per year, more than 1/3 are ruled in favor of the consumer. Many denied appeals do not necessarily lose on merit, but for other reasons. See the stats on the National Association of Insurance Commissioners website at https://eapps.naic.org/documents/cis_aggregate_complaints_by_coverage_types.pdf

]]> By: Chris http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-515499 Chris Wed, 11 Feb 2009 20:30:41 +0000 http://www.thesimpledollar.com/?p=3132#comment-515499 @ Dan #37 I don't understand why we demonize financial companies for making money. Cost is only an issue in the absence of value. If you don't find the cost is worth what you get for something, don't buy it. But, PLEASE don't beat up on financial companies for trying to turn a profit. Do you know what the mark-up is on a bag of Cheetos? @ Dan #37

I don’t understand why we demonize financial companies for making money. Cost is only an issue in the absence of value. If you don’t find the cost is worth what you get for something, don’t buy it. But, PLEASE don’t beat up on financial companies for trying to turn a profit. Do you know what the mark-up is on a bag of Cheetos?

]]> By: Scott A Olson http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-515497 Scott A Olson Wed, 11 Feb 2009 20:25:09 +0000 http://www.thesimpledollar.com/?p=3132#comment-515497 The funny thing about long term care insurance is that the price of a policy can vary a lot from one insurance company to the next. Each long term care policy has a different way of charging premium based upon health history, marital status, choice of benefits, and even state of residence. There are some long term care insurance policies from A+ rated companies that are LITERALLY twice as expensive as identical policies from other A+ rated insurers. It pays to shop. What most people don't realize is that group (association and employer-based policies) are usually more expensive and have less benefits (particularly less benefits for home healthcare) than individual policies. It pays to shop and compare all types of insurance, but especially long term care insurance. Scott A. Olson The funny thing about long term care insurance is that the price of a policy can vary a lot from one insurance company to the next. Each long term care policy has a different way of charging premium based upon health history, marital status, choice of benefits, and even state of residence.

There are some long term care insurance policies from A+ rated companies that are LITERALLY twice as expensive as identical policies from other A+ rated insurers. It pays to shop.

What most people don’t realize is that group (association and employer-based policies) are usually more expensive and have less benefits (particularly less benefits for home healthcare) than individual policies. It pays to shop and compare all types of insurance, but especially long term care insurance.

Scott A. Olson

]]> By: Erin http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-515265 Erin Wed, 11 Feb 2009 17:44:19 +0000 http://www.thesimpledollar.com/?p=3132#comment-515265 As someone pointed out, what I should have said is that you are statistically more likely to become disabled and unable to work at a relatively young age than you are to die at a young age. :) As someone pointed out, what I should have said is that you are statistically more likely to become disabled and unable to work at a relatively young age than you are to die at a young age. :)

]]> By: Sheila http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-515234 Sheila Wed, 11 Feb 2009 17:17:17 +0000 http://www.thesimpledollar.com/?p=3132#comment-515234 While trying to optimize your health is, of course, a wonderful idea and helps in preventing many health problems, it doesn't prevent the diseases that you have no control over. I developed a movement disorder and could no longer work. I didn't have LTD. It took me over two years to get SSD (after the initial denial), and, frankly, I'm sure I couldn't live independently on that amount of money if I was single. I encourage my biological children to get LTD insurance because there's a chance of a genetic component to my disorder. We pay for LTD for my husband (through his work) because we've already experienced what life is like with someone with a disability and no income. While trying to optimize your health is, of course, a wonderful idea and helps in preventing many health problems, it doesn’t prevent the diseases that you have no control over. I developed a movement disorder and could no longer work. I didn’t have LTD. It took me over two years to get SSD (after the initial denial), and, frankly, I’m sure I couldn’t live independently on that amount of money if I was single. I encourage my biological children to get LTD insurance because there’s a chance of a genetic component to my disorder. We pay for LTD for my husband (through his work) because we’ve already experienced what life is like with someone with a disability and no income.

]]> By: NYC reader http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-515126 NYC reader Wed, 11 Feb 2009 14:24:36 +0000 http://www.thesimpledollar.com/?p=3132#comment-515126 I'm going to be dissenting on the LTC insurance issue. Depending upon your specific situation, it can be just as important as own-occupation LTD. Don't assume that you will only need LT care at the end of your long life. Look at comment #22. Kellzzz became a quadriplegic at age 30 and is now living with her/his parents. What care options are available in this situation after the parents are unable to provide care or deceased? That 60% disability insurance payment (not indexed for inflation) plus whatever SS disability Kellzzz is receiving won't cover the cost of a nursing home. Kellzzz will have to apply for and receive Medicaid, meaning nearly all assets have to be depleted, and the disability insurance payout will be going to the government as condition of receiving Medicaid. If you've ever had to navigate the world of extended care/custodial care for a loved one, it is a rude ugly awakening. The best care facilities don't want to take Medicaid patients, and often require upfront payments for a set period of time from patient assets (typically three years) before accepting Medicaid. The institutions that take Medicaid right off the bat are ones you never ever want to be stuck in. Also, many LTC policies (such as the one I have) cover in-home care and respite care (giving family caregivers time off). My policy pays 75% of the institutional rate for in-home care, and provides 30 days/year of respite care. In-home care usually provides a much higher quality of life for the recipient than being in an institution. My policy also covers informal caregivers (such as family and neighbors) at the 75% rate. This is important, because family members often work fewer hours or not at all to take care of a loved one, and their income stream suffers. The only policy limitation is one year for informal caregivers who normally live with the patient (e.g. a spouse). Another thing to look for in LTC policies is a weekly benefit. Let's say you buy a policy which pays $100/day. If you receive $600 services on one day, and nothing the other six days of the week, you're on the hook for $500 out-of-pocket. If you have a $100/day policy with a weekly benefit, you have $700 a week for services no matter how they are spread out during the week. The weekly benefit is a really tiny extra cost (maybe a few dollars/month) and well worth it. As several readers have noted, don't count on SS disability to be approved on the first try, and definitely don't expect it to be approved in a timely manner. A 53-year old neighbor recently became unable to work (she was a teacher) due to ongoing cancer treatments. She applied for SS disability and was told it would take a minimum of five months for a decision (not APPROVAL, merely a DECISION). Her financial situation was not good, because she had been incurring extensive medical expenses for the prior three years and had been working a reduced schedule for the past two years (she had already used a full paid year of sabbatical leave to cover her first round of treatment). Her condition worsened, she borrowed money from everyone she knew to cover her medical bills (and we knew she oould never pay it back, so we treated the money as gifts), friends and family became caregivers, and she ultimately ended up with hospice care at home. She died before ever getting a penny of SS disability, even after contacting her Congressperson for assistance. A work colleague was hit by a car while bicycling. He was found on the road hours later, unconscious, with many injuries including a fractured skull and brain damage. After a few weeks in a hospital treating his injuries, he spent five months in a rehab hospital relearning to walk, talk, and use his hands. He made an amazing recovery, although he still has cognitive changes and deficits apparent to those who knew him before the accident. He had an LTC policy with a 30-day waiting period. The waiting period started while he was still in the hospital. As a result, he received benefits from the LTC insurance while in rehab. Critical things to look at/look for in LTC policies beyond the things I've already mentioned: Waiting period: How long before the benefits start, longer waiting period = lower premiums. Your emergency fund should cover this period, make sure it's adequate. Daily benefit rate: Higher benefits = higher premiums. Know the cost for LT care in your locality. Weekly benefit: As I explained above, it adds a few dollars/month to the premium, I think it's worth it. Inflation protection: Ouch. No easy way around this one. You can either buy LTC insurance with escalating premiums (age-based) to cover increasing daily benefit amounts, or buy a policy that has level premiums and an automatic escalating benefit (high premiums at the outset, but inflation will make them seem more affordable as time goes on). Depends on your age/financial situation. Lifetime benefit limit/benefit period: These two are related. Unlimited benefit period costs more, but you'll never run out of money. Once you've hit the lifetime benefit limit and/or benefit period (e.g. 5 year period), you won't be getting money from the insurance. If you're 80, it's not likely you'll need more than 5 years. If you're 30 and have a rollover accident like Kellzzz, you definitely want the unlimited benefit period, so decide based on your age, circumstances, and finances. Facilities-only or comprehensive: Facilities-only covers care only in an institution. Comprehensive includes home-based care and adult day care, which are much more likely to be needed for most people. ADL: Activities of Daily Living. This is a measure of ability to do various tasks related to taking care of oneself, such as bathing, toileting, dressing, continence, transferring from a bed to a chair, feeding oneself, cognitive ability, etc. Insurance kicks in when you are unable to do X number of ADLs, as certified by doctor. The X number is important, some insurance kicks in at 3 or 4 ADLs, some at 6. Fewer required ADLs are better. Exclusions: The fine print that can burn you. Read this really carefully. Most policies I'm aware of exclude acts of war and terrorism, although the LTC policy for US federal employees and military specifically does NOT exclude these. If your state has an LTC partnership (NY does), check out the insurance offerings, they may be better than what you can get on your own or via your job/group affiliation. I’m going to be dissenting on the LTC insurance issue. Depending upon your specific situation, it can be just as important as own-occupation LTD.

Don’t assume that you will only need LT care at the end of your long life.

Look at comment #22. Kellzzz became a quadriplegic at age 30 and is now living with her/his parents. What care options are available in this situation after the parents are unable to provide care or deceased? That 60% disability insurance payment (not indexed for inflation) plus whatever SS disability Kellzzz is receiving won’t cover the cost of a nursing home. Kellzzz will have to apply for and receive Medicaid, meaning nearly all assets have to be depleted, and the disability insurance payout will be going to the government as condition of receiving Medicaid.

If you’ve ever had to navigate the world of extended care/custodial care for a loved one, it is a rude ugly awakening. The best care facilities don’t want to take Medicaid patients, and often require upfront payments for a set period of time from patient assets (typically three years) before accepting Medicaid. The institutions that take Medicaid right off the bat are ones you never ever want to be stuck in.

Also, many LTC policies (such as the one I have) cover in-home care and respite care (giving family caregivers time off). My policy pays 75% of the institutional rate for in-home care, and provides 30 days/year of respite care. In-home care usually provides a much higher quality of life for the recipient than being in an institution. My policy also covers informal caregivers (such as family and neighbors) at the 75% rate. This is important, because family members often work fewer hours or not at all to take care of a loved one, and their income stream suffers. The only policy limitation is one year for informal caregivers who normally live with the patient (e.g. a spouse).

Another thing to look for in LTC policies is a weekly benefit. Let’s say you buy a policy which pays $100/day. If you receive $600 services on one day, and nothing the other six days of the week, you’re on the hook for $500 out-of-pocket. If you have a $100/day policy with a weekly benefit, you have $700 a week for services no matter how they are spread out during the week. The weekly benefit is a really tiny extra cost (maybe a few dollars/month) and well worth it.

As several readers have noted, don’t count on SS disability to be approved on the first try, and definitely don’t expect it to be approved in a timely manner. A 53-year old neighbor recently became unable to work (she was a teacher) due to ongoing cancer treatments. She applied for SS disability and was told it would take a minimum of five months for a decision (not APPROVAL, merely a DECISION). Her financial situation was not good, because she had been incurring extensive medical expenses for the prior three years and had been working a reduced schedule for the past two years (she had already used a full paid year of sabbatical leave to cover her first round of treatment). Her condition worsened, she borrowed money from everyone she knew to cover her medical bills (and we knew she oould never pay it back, so we treated the money as gifts), friends and family became caregivers, and she ultimately ended up with hospice care at home. She died before ever getting a penny of SS disability, even after contacting her Congressperson for assistance.

A work colleague was hit by a car while bicycling. He was found on the road hours later, unconscious, with many injuries including a fractured skull and brain damage. After a few weeks in a hospital treating his injuries, he spent five months in a rehab hospital relearning to walk, talk, and use his hands. He made an amazing recovery, although he still has cognitive changes and deficits apparent to those who knew him before the accident. He had an LTC policy with a 30-day waiting period. The waiting period started while he was still in the hospital. As a result, he received benefits from the LTC insurance while in rehab.

Critical things to look at/look for in LTC policies beyond the things I’ve already mentioned:

Waiting period: How long before the benefits start, longer waiting period = lower premiums. Your emergency fund should cover this period, make sure it’s adequate.

Daily benefit rate: Higher benefits = higher premiums. Know the cost for LT care in your locality.

Weekly benefit: As I explained above, it adds a few dollars/month to the premium, I think it’s worth it.

Inflation protection: Ouch. No easy way around this one. You can either buy LTC insurance with escalating premiums (age-based) to cover increasing daily benefit amounts, or buy a policy that has level premiums and an automatic escalating benefit (high premiums at the outset, but inflation will make them seem more affordable as time goes on). Depends on your age/financial situation.

Lifetime benefit limit/benefit period: These two are related. Unlimited benefit period costs more, but you’ll never run out of money. Once you’ve hit the lifetime benefit limit and/or benefit period (e.g. 5 year period), you won’t be getting money from the insurance. If you’re 80, it’s not likely you’ll need more than 5 years. If you’re 30 and have a rollover accident like Kellzzz, you definitely want the unlimited benefit period, so decide based on your age, circumstances, and finances.

Facilities-only or comprehensive: Facilities-only covers care only in an institution. Comprehensive includes home-based care and adult day care, which are much more likely to be needed for most people.

ADL: Activities of Daily Living. This is a measure of ability to do various tasks related to taking care of oneself, such as bathing, toileting, dressing, continence, transferring from a bed to a chair, feeding oneself, cognitive ability, etc. Insurance kicks in when you are unable to do X number of ADLs, as certified by doctor. The X number is important, some insurance kicks in at 3 or 4 ADLs, some at 6. Fewer required ADLs are better.

Exclusions: The fine print that can burn you. Read this really carefully. Most policies I’m aware of exclude acts of war and terrorism, although the LTC policy for US federal employees and military specifically does NOT exclude these.

If your state has an LTC partnership (NY does), check out the insurance offerings, they may be better than what you can get on your own or via your job/group affiliation.

]]> By: DDFD at DivorcedDadFrugalDad http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-515036 DDFD at DivorcedDadFrugalDad Wed, 11 Feb 2009 12:20:06 +0000 http://www.thesimpledollar.com/?p=3132#comment-515036 Trent, I am going to simplify this-- if you want more info contact me directly through my email. At your age, the disability insurance to age 65 makes the most sense. As for the long term care insurance, wait until you reach about age 50. Trent,

I am going to simplify this– if you want more info contact me directly through my email.

At your age, the disability insurance to age 65 makes the most sense.

As for the long term care insurance, wait until you reach about age 50.

]]> By: Dan http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514969 Dan Wed, 11 Feb 2009 10:59:06 +0000 http://www.thesimpledollar.com/?p=3132#comment-514969 I'm not a fan of optional insurance. The insurance companies are selling you the insurance so that they can make money. That means that it is a bad deal for you. Also, these companies make bigger profits if they deny you coverage you deserve. They have people whose job it is to deny as much as possible. Before my mother-in-law retired, her job was to write up letters to deny people coverage which she could see the people should have received. I don't trust insurance companies. Reading the story of the poor quadriplegic gentlreman in comment 22 above, he states that he had LTD insurance through his work but later got cut off. Doesn't that tell you everything you need to know about the reliability of insurance companies? I’m not a fan of optional insurance. The insurance companies are selling you the insurance so that they can make money. That means that it is a bad deal for you.

Also, these companies make bigger profits if they deny you coverage you deserve. They have people whose job it is to deny as much as possible. Before my mother-in-law retired, her job was to write up letters to deny people coverage which she could see the people should have received. I don’t trust insurance companies.

Reading the story of the poor quadriplegic gentlreman in comment 22 above, he states that he had LTD insurance through his work but later got cut off. Doesn’t that tell you everything you need to know about the reliability of insurance companies?

]]> By: Sheila http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514767 Sheila Wed, 11 Feb 2009 07:06:14 +0000 http://www.thesimpledollar.com/?p=3132#comment-514767 Go with the LTD. I utilized it while I was going through the breast cancer treatment. I continue to pay for it. It gives me peace of mind. Go with the LTD. I utilized it while I was going through the breast cancer treatment. I continue to pay for it. It gives me peace of mind.

]]> By: Sharon http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514633 Sharon Wed, 11 Feb 2009 04:50:03 +0000 http://www.thesimpledollar.com/?p=3132#comment-514633 Steve, if you know you will be having a family, it can pay to get life insurance now. First, you may become ineligible for life insurance quite suddenly, leaving your children uninsured. Secondly, young people in their 20s can come out ahead to buy a universal or whole life policy, if you hang on to it. Many of these policies can change to annuities, or provide for long term care, or home care in the end of your life. You will never be in your early 20s again, and the additional costs of higher and higher premiums as you age will be something to factor in. In addition, should you become uninsurable in the future, or unemployed, etc., quit paying premiums when you move and your mail isn't forwarded or any of a variety of unwanted events happen, you could once again end up uninsured and uninsurable. Whenever you buy a policy, and we do have whole life and universal life, get the disability rider. If you become disabled, the premiums continue to get paid at no cost to you. Steve, if you know you will be having a family, it can pay to get life insurance now. First, you may become ineligible for life insurance quite suddenly, leaving your children uninsured. Secondly, young people in their 20s can come out ahead to buy a universal or whole life policy, if you hang on to it. Many of these policies can change to annuities, or provide for long term care, or home care in the end of your life. You will never be in your early 20s again, and the additional costs of higher and higher premiums as you age will be something to factor in.

In addition, should you become uninsurable in the future, or unemployed, etc., quit paying premiums when you move and your mail isn’t forwarded or any of a variety of unwanted events happen, you could once again end up uninsured and uninsurable.

Whenever you buy a policy, and we do have whole life and universal life, get the disability rider. If you become disabled, the premiums continue to get paid at no cost to you.

]]> By: Hogan http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514572 Hogan Wed, 11 Feb 2009 03:53:36 +0000 http://www.thesimpledollar.com/?p=3132#comment-514572 Trent: I don't think you can buy long term care insurance until you are at least 55 years of age, you got a ways to go. @Kory you must be from Omaha (maybe Minneapolis) because of your attitudes about Iowa drivers. Iowa has nothing to do with it, maybe it could be any rural person not used to driving on busy streets coming to your town to spend money in your big city. So the next time an Iowan brakes suddenly in front of you because they are lost remember that they are just like any other person driving in a city they are not used to driving in on a daily basis including your drivers from Valentine. Trent: I don’t think you can buy long term care insurance until you are at least 55 years of age, you got a ways to go.

@Kory you must be from Omaha (maybe Minneapolis) because of your attitudes about Iowa drivers. Iowa has nothing to do with it, maybe it could be any rural person not used to driving on busy streets coming to your town to spend money in your big city. So the next time an Iowan brakes suddenly in front of you because they are lost remember that they are just like any other person driving in a city they are not used to driving in on a daily basis including your drivers from Valentine.

]]> By: John http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514564 John Wed, 11 Feb 2009 03:47:54 +0000 http://www.thesimpledollar.com/?p=3132#comment-514564 I helped impliment LTC where I work, it is complicated with lots of options. You should be better off if you can get LTC through a group ie teachers assoiation, as you have mentioned your wife was a teacher). I found a LTC company if you was young you could pay it off in 5, 10, 20, yearsa or by 65 yrs old. MY advise only insure what you can't afford to pay yourself. I helped impliment LTC where I work, it is complicated with lots of options. You should be better off if you can get LTC through a group ie teachers assoiation, as you have mentioned your wife was a teacher). I found a LTC company if you was young you could pay it off in 5, 10, 20, yearsa or by 65 yrs old. MY advise only insure what you can’t afford to pay yourself.

]]> By: Nate @ Money Young http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514537 Nate @ Money Young Wed, 11 Feb 2009 03:03:16 +0000 http://www.thesimpledollar.com/?p=3132#comment-514537 Trent, what you are looking for is Security. If you haven't seen this article you should check it out: http://www.wisebread.com/security-is-an-illusion-freedom-is-real -Nate Trent, what you are looking for is Security. If you haven’t seen this article you should check it out:

http://www.wisebread.com/security-is-an-illusion-freedom-is-real

-Nate

]]> By: Valerie http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514414 Valerie Wed, 11 Feb 2009 00:57:29 +0000 http://www.thesimpledollar.com/?p=3132#comment-514414 Bobbi, I'd sure be interested in that provider, if you didn't mind telling me. I'm researching life and disability insurance for myself. mulewagon@yahoo.com Bobbi, I’d sure be interested in that provider, if you didn’t mind telling me. I’m researching life and disability insurance for myself. mulewagon@yahoo.com

]]> By: Bobbi http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514304 Bobbi Tue, 10 Feb 2009 22:46:15 +0000 http://www.thesimpledollar.com/?p=3132#comment-514304 Trent: My husband and I are in our early 60s - much older than you. Five years ago we bought a combination life insurance/long-term care insurance policy. It will pay $100,000 death benefit or $100,000 in long-term care benefits (for each of us). How you use the benefits is up to you - nursing home, in-home care, something inbetween. Our premium for this policy is reasonable and does not increase as we age. The benefits do not decrease as we get older. So far, so good for us and we are hoping to keep the policy until our beneficiaries benefit. :-) If you are interested in the provider let me know. (I don't work for them or get any benefit for a referral.) Trent:
My husband and I are in our early 60s – much older than you. Five years ago we bought a combination life insurance/long-term care insurance policy. It will pay $100,000 death benefit or $100,000 in long-term care benefits (for each of us). How you use the benefits is up to you – nursing home, in-home care, something inbetween. Our premium for this policy is reasonable and does not increase as we age. The benefits do not decrease as we get older. So far, so good for us and we are hoping to keep the policy until our beneficiaries benefit. :-) If you are interested in the provider let me know. (I don’t work for them or get any benefit for a referral.)

]]> By: Carrie http://www.thesimpledollar.com/2009/02/10/riding-the-line-of-overcautiousness/comment-page-1/#comment-514279 Carrie Tue, 10 Feb 2009 22:06:04 +0000 http://www.thesimpledollar.com/?p=3132#comment-514279 What KoryO @ 1;15 pm said. LTD is essential if you're the breadwinner or (like me) single. LTC is iffier. At your age, I think LTC would be overkill. I did buy LTC insurance for my 62 year old Mom, though. What KoryO @ 1;15 pm said. LTD is essential if you’re the breadwinner or (like me) single. LTC is iffier. At your age, I think LTC would be overkill. I did buy LTC insurance for my 62 year old Mom, though.

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