Consider my clients who are friendly neighbors of mine at Yacht Harbor Towers in Honolulu. After sitting down together and reviewing their unique personal situation, they bought long-term care insurance (LTCi) policies that would help pay what was then the going rate for this type of care here in the islands. But, to be sure, it wasn’t a “snap” decision. It never is with LTCi. Every LTCi client I deal with, no matter how wealthy they may happen to be, always wants to know, “what will it cost us?”, “what if we never use it?”, etc.
[Hopefully after viewing the featured, “Vernon Duckett – Peace of Mind for the Long Term” video, viewers will have a paradigm shift and their focus will be on the unequivocal, vast potential benefits.]
Long story short, this fine couple started with me in 2009 with a $250 daily benefit and a four-year benefit period with 5% simple inflation (vs. preferred “compound” inflation variable which I advise), which means the benefits increase at 5% of the original amount each year until they double in 20 years (he’ll be 83, she 82). Their daily benefit would have been growing at $12.50 each year so their benefit pool is now worth $425 x four years = $730,000. She and her husband bought the same policy so together they have $1.4 million in benefits. There is a 30-day elimination period so they are responsible for the first 30 days in charges.
He and his wife were 62 and 63 when they bought their policies in 2009, and their combined premium is $5,828 annually. They have now paid about $30,000 in premium for the $1.4 million in benefits in 20 years. If one of them had a claim today and used the entire daily benefit of $312.50, they would get their entire premium back in less than four months. A measly four (4) months! On top of that, the premium would stop for the one on who is on claim.
So what do you think? Does LTCi make sound economic sense? You Decide: It’s Your Life. But in my professional estimation, LTCi doesn’t just make good economic sense, it is actually a BARGAIN. So did my neighbors make a good economic decision? I definitely think so.