Consumer Reports Strikes Again...

[kpbdy99]

You can always count on these guys to be completely clueless. Now they've decided that anyone with $300K or less in assets shouldn't buy LTC insurance. Sigh...

Google "Washington Post long term care" and you'll find the article.

 

[Arthur Rudnick]

Are we looking for an article from Consumer Reports or the Washington Post?

 

[ltcadviser]

You can always count on these guys to be completely clueless. Now they've decided that anyone with $300K or less in assets shouldn't buy LTC insurance. Sigh...

Google "Washington Post long term care" and you'll find the article.

I've never been a fan of Consumer Reports past articles on LTCi; and I havent read this piece yet. I must admit, though, I might agree with CR on this point. I usually won't write LTC if my clients don't have a 250k minimum net worth.

 

[kpbdy99]

I've never been a fan of Consumer Reports past articles on LTCi; and I havent read this piece yet. I must admit, though, I might agree with CR on this point. I usually won't write LTC if my clients don't have a 250k minimum net worth.

Often I'd agree with you, but you can't use that as the only factor. The problem with these articles and these sweeping qualifiers is that someone with $250K in the bank who might be a perfectly reasonable candidate for LTC insurance sees it and says "Oh, well, this isn't for me."

I've had clients with a couple hundred thousand in savings, but a stable $100K retirement income. I've had folks with next to nothing in cash, but several million in real estate. I've had kids buy coverage for mom, who's living on ss and a small pension. It also depends in a big way on geography. You're not going to find a lot of people in the rural parts of my state with $300K in retirement savings. That certainly doesn't mean that none of them could benefit from a well-designed and affordable safety net.

 

[Arthur Rudnick]

I've had clients with a couple hundred thousand in savings, but a stable $100K retirement income. I've had folks with next to nothing in cash, but several million in real estate. I've had kids buy coverage for mom, who's living on ss and a small pension. It also depends in a big way on geography. You're not going to find a lot of people in the rural parts of my state with $300K in
retirement savings. That certainly doesn't mean that none of them could benefit from a well-designed and affordable safety net.

I tend to agree with you Kerry. Jack works mostly with high, net-worth clients so he may have a different perspective?

I don't use very complicated fact-finders in order to determine whether LTCi is appropriate or not. I basically want to know the answers to 2 questions:
1) Do you feel that you have enough in the way of assets that you want to protect?
2) Do you have enough in income to comfortably afford the premiums?

And, like you, I've had a number of situations where the kids are paying for their parent's policy. Either they're doing it to protect their own inheritance or they're doing it to be sure their parents have options if they ever require care.

Now, with that said, obviously if I'm having a conversation with someone who tells me they have very little in the way of assets, I'd be the first one to tell them a policy does not make sense. But everyone is different and each situation has to be looked at on it's own.

 

[Guest]

Now, with that said, obviously if I'm having a conversation with someone who tells me they have very little in the way of assets, I'd be the first one to tell them a policy does not make sense.

When you see the single (divorced) 55 year old with income of $65,000 a year (perhaps a teacher or office worker) with maybe $110,000 in liquid assets and maybe a home (that is not underwater but does not have a lot of equity or perhaps is break-even) and they worry about the cost of assisted living or a nursing facility or home care, what do you advise them to do?

 

[Arthur Rudnick]

When you see the single (divorced) 55 year old with income of $65,000 a year (perhaps a teacher or office worker) with maybe $110,000 in liquid assets and maybe a home (that is not underwater but does not have a lot of equity or perhaps is break-even) and they worry about the cost of assisted living or a nursing facility or home care, what do you advise them to do?

I would normally not recommend a policy for a New Yorker with only $100,000 to their name. If care were needed in a nursing home, she would run out of money in less than a year and wind up on Medicaid. An ALF would wipe her out in about 1 1/2 years and sometimes home care can cost about the same or even more.

A decent policy would run her about $3,000-$4,000/year. Probably affordable now while she's working but what happenes in 10 years when she's retired and maybe had a rate increase (or 2) to deal with?

Unfortunately, there are many agents out there that would meet with this lady, fill out an app, then take a check & run.
And, that's what gives the industry a bad name.

As I've mentioned in past posts, LTCi is not right for everyone, and I don't feel that it's appropriate in the scenario that you described.

 

[ltcadviser]

Often I'd agree with you, but you can't use that as the only factor. The problem with these articles and these sweeping qualifiers is that someone with $250K in the bank who might be a perfectly reasonable candidate for LTC insurance sees it and says "Oh, well, this isn't for me."

I've had clients with a couple hundred thousand in savings, but a stable $100K retirement income. I've had folks with next to nothing in cash, but several million in real estate. I've had kids buy coverage for mom, who's living on ss and a small pension. It also depends in a big way on geography. You're not going to find a lot of people in the rural parts of my state with $300K in retirement savings. That certainly doesn't mean that none of them could benefit from a well-designed and affordable safety net.

I agree with your points, Kerry. Your inital comment only referred to assets, without a distinction between liquid and illiquid. I was including real estate and home equity within my comment regarding net worth. That being said a significant pension is always a huge determinant, as well for suitability.