These “blended” or “living benefits” have become quite common in today’s life insurance marketplace. They’re billed as “no cost” which of course can’t be true, but that’s irrelevant because with many carriers and products, they’re built in to the chassis so you can’t opt out.
Personally I think they’re a great way of providing a supplemental nursing or assisted living / home health care benefit. Many people need this protection. Few have coverage for it and it can wipe out savings pretty quickly. What generally happens, because people don’t have the coverage, is they simply don’t get the care needed. I know many people who have had parents pass without professional assisted living or home health care because a family member provided the care. In lots of cases, they didn’t receive the care they really needed and the burden put on the caregiver was enormous. These policies will help offset some of the cost. The old “stand alone” LTC policies are very much becoming a thing of the past. Both my parents had them and spent a lot of money for many yrs. Neither of them needed the care so it was a waste of premium dollars (if you consider not using insurance a waste - I don’t as that’s like saying my house didn’t burn down so having home owners was a waste). Had they had one of these blended contracts, the policy would have paid out the death benefit.
Many won’t need the care. But many will. Kind of a crap shoot to go without protection. However, understand that most of these products will serve as a supplemental benefit as the actual cost of care is way more than these will pay.
Thanks for the articles, Bunsen! This one ^^ was sobering! I guess it’s always good to live beneath your means. Even moreso when income generation potential has declined/stopped.
@rickle1- interesting info on the blended policies (LTC & payout at death). From what I could tell from a quick review - seems like they all have pretty high buy-ins? Like, $150k?
The typical policy I’m referring to is a life insurance policy with a LTC rider. They typically will payout a substantial percentage of the death benefit during life for LTC related issues assuming 2 of the 6 ADLs are met. I know of other contracts that are primarily single premium LTC products that are technically life insurance contracts (perhaps that’s the “buy in” you’re referring to).
I’ve also heard horror stories about qualifying for ADL.One example: Parent could not properly prepare or serve themselves food. But they could still hold a spoon and lift to their mouth. So technically they could still eat.
It was really hard for my in laws to get their LTC to pay. They were not capable of taking care of themselves, but that was irrelevant. FIL’s doctor took forever to certify that FIL met criteria for needing assistance with two ADLs. It took a whole lot of badgering to get him to complete the paperwork. Fortunately, he was in an AL facility when he had to recertify, and they were super helpful. Later, when MIL was ready to use her LTC, the same staff helped her. The insurance company works hard to keep from paying, that’s for sure.
LTC insurance seems super helpful but tricky. I saw my parents need so much care at the end of life (first from me, then from paid aides) that I really don’t want to burden my kids in the future with an elderly parent without that financial support.
Disheartening to hear that you have to fight hard to get the LTC money, though!
Surprisingly it took only a phone call to initiate my mother’s LTC policy. (Oh, and I think I had to send PDF for health care POA). She was enrolled in Hospice by then, which also had services… which she kept declining. Alas, she died soon after. I never did go chase reimbursement for the one private nurse visits. But I am glad she did not linger. And definitely having the LTC policy, one of the older and better ones, gave her a lot of peace of mind over the years.
Interesting. Boeing has lost a large number of experienced engineers to earlier than usual retirement because of the rising interest rates, which makes their retirement package lose $$:
That page mentions that this type of thing is not unique to Boeing, but could exist in other defined benefit pension plans where there is an option to take a lump sum or an annuitized stream of monthly checks. Boeing’s conversion between the two is based on interest rates (to be expected) which are adjusted yearly, so many eligible employees took retirement before the adjustment, when lower interest rates meant that the lump sum amount was higher.
So any current employee with a defined benefit pension plan with a lump sum option may want to check on the calculation and how interest rate changes affect it.
I’m glad I opted for annuities, that monthly payment allows me to refinance at a much attractive rate, the savings per month were more than the pension even. I have tiny pension after working at one company for just 6 years, but not complaining. I’m entering my 8th of retirement base on that tiny pension.
My H worked for a large company that froze pensions and moved to the annuity-or-lump-sum model. Some of his coworkers chose to retire based on interest rates. You could lose a lot if you didn’t go at just the right time. Most of his contemporaries didn’t have the luxury of choosing, though, when the company purged its older employees. Of course, that’s not the way the company spun it.
Could somebody please post a link to the IRMAA table that would be used for 2023 Medicare charges?
We did large Roth rollovers this year and in 2021, expecting to have an IRMAA hit. But I’m surprised husband is in a higher than expected tier on a new Medicare statement received this week. (I’m not yet 65… so at least it is not a 2x surprise.)
We had a capital gains event due to an inheritance in 2021 that pushed us over the IRMAA limit. However, my husband didn’t start Medicare until 2022. We got a letter last week that he will be subject to IRMAA starting in January 2023. It makes no sense at all. Our income for 2022 will be 1/2 of the IRMAA cut-off (and has been below it for our entire working lives, except 2021) and for 2023 will be even less than that! So he called the number in the letter. LOL. An hour and a half later they told him to fax (FAX???) a certain form with verifying attachments but that he could not make an appointment for an in-person meeting. There are no appointments available in the foreseeable future. There’s no way to check that they are processing the fax we sent or to follow up. And in the meantime, they will be billing us for an additional $432 per month.
