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Duane Lipham
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Duane Lipham is a Certified Long-Term Care (CLTC) consultant who writes extensively on long-term...read more

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Financing Long-Term Care

Comments For "The Advantages of Long-Term Care Insurance for Couples"
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6 Responses to “The Advantages of Long-Term Care Insurance for Couples”
  1. WSmith Says:

    There are many concerns when purchasing long term care insurance. One concern would be what if premiums are not used due to an unexpected event, such as death. I have been researching ways to not lose my premiums if such an event took place. I feel I have found a solution and it is called, "Care Protector Plus" by Preservation Advantage. I am having my financial advisor look into it and you should to.

  2. Duane Lipham Says:

    I encourage my readers and clients to think of long-term care insurance pretty much the same as they would with any other form of insurance that they buy. In other words, if you do not get into an accident during the year does your auto insurance company send back your premium for the year? Or are your homeowners premiums returned if your house does not burn down? Or your health insurance premiums returned when you do not have to visit the doctor during the year?

    Obviously not. This is because insurance is NOT an investment. It is a protection vehicle for your investments. In its simplest form insurance is an agreement to take a small loss in order to be guaranteed to never have to face a large loss that could lead to financial ruin.

    Most alternatives to long-term care insurance do not provide adequate protection against the actual costs of care for the same leverage as LTCI itself.

    I will try to go into further detail on this in a future posting.

  3. WSmith Says:

    Dear Mr. Lipham that's all well and good, but long term care insurance is significantly more expensive than the other insurances you mentioned, isn't it? If you have the opportunity and the ability to purchase long term care insurance and pass on a death benefit to your family tax-free, why wouldn't you do what I saw with Preservation Advantage's Care Protector Plus?

  4. Duane Lipham Says:

    Mr. Smith,

    You stated, “... long term care insurance is significantly more expensive than the other insurances you mentioned, isn’t it?”

    That is true. The reason that long term care insurance is usually more expensive than homeowner’s insurance or auto insurance is because the probability of making a large LTCI claim is very high. Similarly, it takes a very short claim (usually just a few months of benefits) in order for one to recoup the entire amount paid in premiums (even when calculating the opportunity cost of the premiums.)

    In your previous post you stated, “I have been researching ways to not lose my premiums if such an event took place. I feel I have found a solution and it is called, Care Protector Plus”

    There is no insurance or investment product named “Care Protector Plus”. That is simply a trademark name for a software program which illustrates buying three insurance products simultaneously. Those three products are:

    long term care insurance AND
    a universal life insurance policy AND
    a split annuity (part immediate annuity/part deferred annuity)

    So, the Care Protector Plus “strategy” won’t be saving you any money spent on long term care insurance premiums. It simply adds two other insurance products on top of long term care insurance.

    You might ask your financial advisor to explain it to you one more time.

  5. wsmith Says:

    I think maybe you are dismissing a good thing on the grounds that multiple components always means less value. Certainly we can think of many machines that use multiple components to provide less cost and more value. In addition, you may have been mistaken on the split annuity concept. The funding vehicle is optional and meant to compare with Hybrids or self funding. The option of either a deferred annuity or a SPIA is available but both are not required to be used. Its not a split annuity.

  6. Duane Lipham Says:

    We can all agree that long term care insurance is a good way to protect one's financial independence from the potentially devastating effects of a loved one needing long term care. Long term care insurance is primarily a means for protecting the financial independence of the "healthy spouse". It is also a very simple and proven way to protect assets for heirs and/or charity.

    Long term care planning is vitally important to many people—especially married couples with a household income of over $75,000 per year. There is a much smaller segment of society that needs estate planning. Whether someone chooses to buy additional insurance products (like life insurance) to help pass assets to their heirs is a completely separate issue and not germane to the suitability of long term care insurance.

    My goal is to make long term care insurance as simple as possible for my clients. The only problem I have with "bundling" a variety of insurance products together and calling it "long term care planning" is that it turns a very simple insurance product into a very complicated concept. The more complicated the insurance industry makes "long term care", the fewer people will choose this vital protection.

    There's a lot to be said for the K.I.S.S. method.

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