You may know that I am not a fan of traditional long-term care insurance. But that is why we are exploring this topic together. It is important for me to reexamine my biases periodically to see how they hold up. On this episode of Retirement Answer Man, Steve Cain, from LTCI joins me to examine traditional long-term care insurance. I have plenty of questions for him so that we can learn how traditional long-term care insurance works and examine our own risks. Join me by listening to this conversation to learn more about long-term care insurance so that you’ll have the tools to determine if it is right for you. 

How to plan for risk 

There are 5 basic strategies to address a risk and shockingly, ignoring the risk is not one of them. No one likes to think about long-term care, but instead of burying our heads in the sand we need to think about how we will confront this risk. These are the 5 strategies that risk management professionals consider. 

1. Retain the risk - this means dealing with it yourself
2. Avoid the risk - not really a possibility in this situation
3. Mitigate the risk - lower the odds of the risk
4. Share the risk - use insurance to help to share the risk
5. Transfer the risk by using insurance to own all of the risk.

Keep these strategies in mind as you listen to the show so that you can begin to consider which one you’ll want to use to consider long-term care.

Is traditional long-term care insurance right for you?

Deciding whether to use traditional long-term care insurance is a difficult decision. The long-term care insurance industry is still in its infancy and there are many factors to consider as a consumer. The industry doesn’t have the best reputation, but Steve Cain is here to help us consider whether traditional long-term care insurance is the best option for our potential long-term care needs

Will the long-term care insurance company be around when we really need it?

We’ve all seen the headlines, long-term care insurance companies raising their rates, or even worse, companies going out of business. How do we know if the insurance company is going to be around when we really need it? Despite the history of problems in the industry, Steve Cain feels that the newer generation of long-term care insurance policies are more stable than the first generations. He feels that the industry has evolved and adapted by learning from the mistakes of the past. Find out why Steve feels the newer insurance policies are more stable than those of the past. 

How are the policies structured?

To get a long-term care insurance policy you’ll have to go through several steps. The companies want to ensure that you won’t need long-term care for a number of years, so they do check your medical history. There are many factors to consider when choosing your policy. The amount you can afford is an important factor. But you’ll also want to consider your lifetime maximum benefit, the maximum benefit amount per month, and you’ll also want to factor for inflation. Find out what else you should consider before you think about getting long-term care insurance. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN SEGMENT

• [3:00] Lifetime maximum benefit

PRACTICAL PLANNING SEGMENT

• [7:53] The long term care insurance industry is in its infancy
• [14:40] What happens to a policy when the company becomes insolvent?
• [20:30] How does a long-term care policy get crafted?
• [29:17] The elimination period used to be bigger than it is now
• [37:14] What is the average premium?

LISTENER QUESTIONS SEGMENT

• [40:44] Tax diversification in retirement
• [47:44] A sequence of return risk question

TODAY’S SMART SPRINT SEGMENT

• [51:30] Consider your long-term care risk

Resources Mentioned In This Episode

Steve Cain

Steve Cain on Twitter @SteveCainLTC

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center