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PostPosted: October 25 18, 11:43 am 
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I got a term policy to cover my daughter through her college years. Then no more life insurance than what work provides.


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PostPosted: October 25 18, 1:01 pm 
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Michael wrote:
Arthur Dent wrote:
P
Isn’t that the whole game of these complicated investment oriented insurance policies? The cost is opaque because it’s buried in the opportunity cost of lost returns on savings. They’re manipulating your loss aversion with this combo product where you think it’s a good deal because you don’t “lose” all your premium dollars but actually end up losing far more through a poor return.


This is exactly my take on these complicated insurance policies. You said it way better than I did.

The type of insurance I struggle with deciding on is if I need long term care insurance. Basically it's nursing home insurance.


I'm thinking about long term care insurance too. To the best of my knowledge, Medicare does not cover this, Medicaid does. So whether or not you want Medicaid to pay for your nursing care depends on what you want to happen to your estate. In many states, Medicaid will pursue claims against your estate to recoup the cost of long term care, as well as any other services Medicaid might have paid for. They can even put a lien on your house if that is your estate's only asset. Long term care is expensive. If you aren't planning to leave your estate to anyone it may not matter if Medicaid takes a $200k bite out of it when you die.

Then there is the questions of whether or not Medicaid will even be around 30 - 40 years from now, and if it is, how well funded it will be. We do have the most powerful political party in our county hell bent on destroying the social safety net. Who's to say they won't succeed?


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PostPosted: October 25 18, 2:00 pm 
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Isn't it common to do a strategic divorce for Medicaid reasons?

I have done no personal research, but my impression is that there is a narrow slice of households where long term care insurance makes sense. For most non-rich people, it's better to just rely on Medicaid. For the rich enough, it makes sense to just pay out of pocket should the need arise. Somewhere in the middle, insurance could be helpful. Not sure where the lines are or what you'd look for in a policy.

As far as political risk, obviously no one knows the future, but Medicaid ended up doing ok under reactionary rule. Republican states are trying to target working age Medicaid recipients not the elderly ones who vote for them.


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PostPosted: October 25 18, 2:42 pm 
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Isn't it great that we, as individuals, have to devote time and thought and money to navigating a profoundly complicated web of financial planning and insurance products just to have a reasonable hope that we won't lose our homes if we get sick, that we can afford to bear the costs of aging? Isn't it great to spend energy and money in your 30's trying to figure out how you'll be able to pay for nursing care and die with your dignity intact when your life inevitably starts to fade away?

Isn't it great that poor kids have to mortgage decades worth of their future earnings, just to get a piece of paper that says they belong in the middle class?

How free are we, America? For God's sake, please don't let socialist liberals come along and ruin the great thing we've got going on here.


Last edited by G. Keenan on October 25 18, 6:14 pm, edited 1 time in total.

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PostPosted: October 25 18, 4:17 pm 
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Like most people these days I will not get health care in retirement. They switched to health savings accounts a year after we had our first kid. The idea is I can use that somehow to both pay for my current health care costs and to save for health care in retirement. I always put in enough to cover our (extremely high) deductible but nothing more. There were a few years we only had the 1 kid where we did not hit our deductible and saved some money in that account. But most years we hit the deductible and save nothing. Lately we have been getting mental health care which is on a different scale and not covered by the same deductible, so we have been drawing it down. It is not a big enough amount to accumulate much interest. Of course I could increase my contribution, but why? There is no way I could save to keep up with skyrocketing health care costs. It just seems like a bad investment. Who even knows what health care will look like when I retire. It just seems more useful to use this money for tangible things here in the present versus some big unknown that is trending in the wrong direction. I still invest in my 401k of course but that money can be used for anything in retirement and not just health care.


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PostPosted: October 25 18, 8:04 pm 
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Has an anecdote about a townie he overheard.
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I'm just asking the pros here so bear with me. I've heard of lost decades before as far as returns go, but is it just possible that our markets could stagnate for ever basically? Or just slow fall? Let's say we just don't figure it out here in America. Like the our govt just screws us essentially long term and returns are basically nothing. What do you do? I assume looking to over seas markets would be the way to go to get returns.

Back to the lost decade thing, If our market does basically stagnate at no real return long term, 10 years lets say, the smart play there is to just keep buying shares right? Then if things were to get going again you'd get back to accumulating returns pretty quickly?

Yeah I'm stupid I know.


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PostPosted: October 26 18, 8:30 am 
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There's someone in my head but it's not me
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G. Keenan wrote:
Michael wrote:
Arthur Dent wrote:
P
Isn’t that the whole game of these complicated investment oriented insurance policies? The cost is opaque because it’s buried in the opportunity cost of lost returns on savings. They’re manipulating your loss aversion with this combo product where you think it’s a good deal because you don’t “lose” all your premium dollars but actually end up losing far more through a poor return.


This is exactly my take on these complicated insurance policies. You said it way better than I did.

The type of insurance I struggle with deciding on is if I need long term care insurance. Basically it's nursing home insurance.


I'm thinking about long term care insurance too. To the best of my knowledge, Medicare does not cover this, Medicaid does. So whether or not you want Medicaid to pay for your nursing care depends on what you want to happen to your estate. In many states, Medicaid will pursue claims against your estate to recoup the cost of long term care, as well as any other services Medicaid might have paid for. They can even put a lien on your house if that is your estate's only asset. Long term care is expensive. If you aren't planning to leave your estate to anyone it may not matter if Medicaid takes a $200k bite out of it when you die.

Then there is the questions of whether or not Medicaid will even be around 30 - 40 years from now, and if it is, how well funded it will be. We do have the most powerful political party in our county hell bent on destroying the social safety net. Who's to say they won't succeed?

Medicare supplements can cover long-term care. As I understand it, you can either choose a supplement that covers short-term or long-term care. My knowledge is largely anecdotal - my mom had the former and during her last month she had a couple of strokes & a c-diff infection resulting in multiple hospital stays with much ICU time. Ran up six-figure health care costs but medicare plus her supplement covered almost all of it and left her estate largely intact. Had she survived and needed the long-term care, her supplement would not have covered. In that case, her estate would've had to fund that until exhausted at which point Medicaid kicks in. I believe an irrevocable trust if set up properly can protect assets from being counted by Medicaid (the rules are quite complex so will leave it up to the GRB legal community to comment further.) And who knows what has happened since we entered Trumpworld.


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PostPosted: October 27 18, 5:27 pm 
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Sorry I'm late to this, but one thing I want to point out about LTC insurance is that all of the main players in the market 20 years ago are in awful shape right now. From an insurer's perspective, for example, Genworth's LTC block is probably the most toxic insurance block in the world, and if they hadn't found an angel investor, they were headed to state control. They still may be headed to state control. A couple of the other big LTC companies from back in the day effectively have been take over by regulators (at least one of the companies did a cute little trick to obscure this development).

That is to say, the insurance company selling the product today may not be there when you need it. That's usually not much of a problem for life insurance companies or property/casualty insurers (home, auto, catastrophe, etc.). As an old boss of mine put it, it's not clear that LTC really benefits from pooling effects, because such a large chunk of the population will have to go into some kind of long-term care facility at some point in their lives, usually a few years before they die, so properly priced LTC coverage isn't so much insurance as it is a prepayment plan. Again, improperly priced LTC insurance leads to insolvencies.

The insurance industry has struggled to deal with this. One response has been to sell shorter term LTC products (no, I'm not kidding), so they can avoid long-tailed risks, which means the new products really don't serve much purpose. Another response has been combination products, which essentially are complicated ways of letting an insurance company manage your money for a while without giving you much insurance benefit (again, this helps the insurer avoid long-tailed risks -- why regulators allow these [expletive] products is beyond me). But mainly the industry has whined about the lack of interest in its expensive coverage.

I've worked in the insurance industry for over twenty years, and I'd like to say nice things where I can, but there are too many red flags with LTC for me to advocate for it.


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PostPosted: October 27 18, 7:26 pm 
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Thanks for the insight, greenback, much appreciated.


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PostPosted: October 30 18, 9:40 am 
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Awesome stuff, GB.

edit

IMADreamer wrote:
I'm just asking the pros here so bear with me. I've heard of lost decades before as far as returns go, but is it just possible that our markets could stagnate for ever basically? Or just slow fall? Let's say we just don't figure it out here in America. Like the our govt just screws us essentially long term and returns are basically nothing. What do you do? I assume looking to over seas markets would be the way to go to get returns.

Back to the lost decade thing, If our market does basically stagnate at no real return long term, 10 years lets say, the smart play there is to just keep buying shares right? Then if things were to get going again you'd get back to accumulating returns pretty quickly?

Yeah I'm stupid I know.


Anything can happen, but I think it's much more likely in the long term (30 yrs+) the markets will grow. The best you can do is have a good plan and dollar cost average over time instead of timing the market.


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