Do now we have an excessive amount of long run care insurance coverage?

No good recommendation. However I’d say this. There may be plenty of shortsighted dismissal of LTCi based mostly on “common” size of keep, however in reality the distribution of stays has a really ugly lengthy tail. It is surprisingly troublesome to search out information on actually lengthy stays, however they’re simply not all that uncommon. I did discover

Nearly half of all MassHealth nursing facility residents keep lower than one yr; however 20% have extraordinarily lengthy lengths of keep. In 2008, 46% of MassHealth lengths of keep had been one yr or much less, whereas 33% had been between 1-4 years and 21% had been greater than 4 years.

And I discovered this chart, and I want they’d a desk so I may learn out and add up the longer ones:

Source

The Masshealth numbers recommend that the 4-and-up tail whole 20%, and by eyeball I will guess that over 7 years totals no less than 5%. There is a 30% to 50% likelihood of ultimately going right into a nursing house, in order that’s 5% of 30% to 50%… a few a %. Similar the possibilities of rolling “2” on a pair of cube. About the identical as your own home burning down.

Our circle of acquaintances consists of no less than one eight-year keep.

You purchase insurance coverage for the issues you may’t afford. Typical nursing house prices are running $100,000 to $150,000/yr. So for a seven-year keep that is $700,000 to $1,050,000.

So $900,000 is not by any means grossly extreme. And that assumes the 5% will increase will preserve tempo with nursing house prices, and my guess based mostly on nothing a lot is “nearly will however not fairly.”

You’ll be able to play the numbers numerous methods, after all. Even when the insurance coverage does not totally cowl the associated fee it is higher than nothing.

The opposite level is that insurance coverage corporations need you to drop your LTCi. Years in the past they priced them on the belief that numerous individuals would drop them, so that they’d get the premiums with out ever having to pay advantages. It turned out that did not occur, and that they’d underpriced the insurance coverage, which has created main turmoil available in the market.

In different phrases, the explanation why Genworth retains “incentivizing” you to switch the plan is that even with the premium will increase it’s most likely a goodish deal for you.