Monday, October 24, 2011

Now, I have to make a decision about purchase of LTC insurance (Lincoln Money Guard)

As part of going through getting distribution from my own mother’s trust, I’m seriously looking at a single premium long term care policy, at age 68. 

Now, it comes from Lincoln National Life.  But it is a single premium Universal Life Insurance policy  (wiki), with a payment of $100000, that provides a death benefit incorporating a residual death benefit equivalent to the Benefit Limit of a Comprehensive Long-Term Care Benefits Rider (“CCBR”) and also adds an Extension of Benefits Rider (“EOBR”).

The monthly premiums for the riders are subtracted from the cash value; they are not added to the original premium.

There is a total long term care benefit limit in the mid $300000 range, and a monthly maximum LTC benefit of about $4800.  There is a maximum duration of 6 years.  There is a surrender value equal to the premium.

To qualify, you have to fill out a detailed questionnaire, and undergo a long telephone interview.  There is a memory test in the interview.  From the documentation, it’s not clear, however, that the applicant must be submitted to all kinds of medical monitoring first (like repeated blood pressure measurements, EKG stress test, or maybe even Holter).  An earlier visit in 2008 from someone with Genworth made it sound like one had to undergo such embarrassing monitoring  (see Sept. 3, 2011 posting).  I’ve  also had another caller from still another company from a man who is selling LTC policies but trying to establish himself as a rock musician.  Sounds tough.

Lincoln calls the product "Money Guard" (trademarked) and has an Internet description, with somewhat different numbers, here.

Is this pseudo-LTC policy "worth it"?  Maybe since there is a no-penalty surrender value, it’s moot.  To qualify for benefits, you need to have difficulties or impairments with two major life activities.   Covered services would include adult day care, home health care, personal care services, hospice, nursing home, and assisted living.  In the northern VA area, a private room in assisted living typically costs about $5000 a month minimum, nursing home, at least $7000 (except that some nursing homes have a minimal care option that is less).  So the patient’s regular assets still must be used and spent down, before Medicaid can be used.

The government’s current reference on LTC is this
Should people who had no children be required to purchase LTC coverage if available?  That sounds like a good policy question.  Should they be required to submit to monitoring first?  Sounds like a privacy question, maybe running afoul of HIPAA.


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