The question I pose here is not whether someone who does not currently have LTCI should buy it. Plenty of other threads on that topic. Rather, the question is whether someone who already has LTCI (me, specially) should continue to pay the premiums or stop paying and let the policy lapse.
Whether I made a good decision many years ago when I bought LTCI, I cannot know, but I do know I’m not getting back what I have already paid, so the relevant question is expected marginal cost v. expected marginal benefit.
Here’s how I have modeled it.
Current age: 65
Current annual premium: 1092 (not guaranteed to stay fixed; has already tripled since I bought)
CURRENT Annual benefit (escalating with compound inflation; has more than doubled since I bought): $48,420 (applicable to both care in a facility and in-home professional care)
No lifetime maximum
Assuming the premiums stay fixed (which I understand they probably won’t), I calculate the opportunity cost of the premiums as a series of payments of 1092/year over the next 20 years, invested in VTI taxable, with a resulting after tax value 20 years from now of about $40,000 (5% nominal after-tax CAGR).
Based on these numbers, it makes sense to me to continue the policies, even taking into account the likelihood of rate increases along the way.
What am I missing?
Whether I made a good decision many years ago when I bought LTCI, I cannot know, but I do know I’m not getting back what I have already paid, so the relevant question is expected marginal cost v. expected marginal benefit.
Here’s how I have modeled it.
Current age: 65
Current annual premium: 1092 (not guaranteed to stay fixed; has already tripled since I bought)
CURRENT Annual benefit (escalating with compound inflation; has more than doubled since I bought): $48,420 (applicable to both care in a facility and in-home professional care)
No lifetime maximum
Assuming the premiums stay fixed (which I understand they probably won’t), I calculate the opportunity cost of the premiums as a series of payments of 1092/year over the next 20 years, invested in VTI taxable, with a resulting after tax value 20 years from now of about $40,000 (5% nominal after-tax CAGR).
Based on these numbers, it makes sense to me to continue the policies, even taking into account the likelihood of rate increases along the way.
What am I missing?
Statistics: Posted by Pdxcess — Thu Aug 22, 2024 3:25 am — Replies 7 — Views 529