Why Joe and Jan Do Not Have Long Term Care Insurance

by Joe Plemon on May 19, 2010

In spite of what the title seems to infer, this post is not about the pros and cons of Long Term Care Insurance (LTCI); it is simply a post about Joe and Jan … and why they don’t have Long Term Care Insurance.

Some background

The year before I turned 60, I started researching Long Term Care Insurance. I read brochures; I asked questions; I solicited quotes and I asked questions about those quotes. Long Term Care Insurance, in case you don’t know, has many nuances and is quite complicated. Because I assumed that Janice would agree that we need this insurance, I wanted to make sure I clearly understood how it worked.

Did you get that word, “assumed"? With all of the grace of a bulldozer I laid my bulging LTCI file on the dining room table and commenced explaining how it worked and why we needed it and how much it would cost. Janice listened thoughtfully and then said, “No one in either of our families has ever needed nursing home care. I think it is a waste of money."

But…but…", I stammered. “A prolonged nursing home stay will wipe out whatever nest egg we have. Is that OK with you?" As I listened to myself talk I realized that I sounded strangely like an insurance representative.

Well, no." Jan replied. “That is not OK. But it is worth the risk to me. I would rather hang on to that premium money than spend it year in and year out for the rest of our lives."

Janice and I have an agreement: we don’t spend money on anything over $100 without both of us agreeing. In this case, we both didn’t agree so we didn’t spend the money.

Still, I was plotting to not give up easily. I remember thinking, “We don’t have to buy the long term care insurance right now. I will wait until before my 61st birthday and bring it up again."

The Years Pass

I kept my word to myself. I brought up the issue before my 61st birthday, before my 62nd birthday and before my 63rd birthday. Each time Janice politely explained her views. Finally, in our most recent discussion, Janice’s voice had an edge to it, “I thought we had already settled this discussion. I understand our decision. I am willing to take the risk. I just don’t think we need to be spending that premium money for insurance that I don’t think we will ever use."

We Negotiate

OK Jan." I countered, “I respect your judgment, so let’s discuss a compromise. Would you agree to increase our investments? Realistically, we will never create a big enough nest egg to be self insured, but we could earmark the nest egg for Long Term Care and it would surely help if we need it. If not, then we still have our money."

Sure. We could do that." she said.

So we agreed, once and for all, that we will not buy Long Term Care Insurance and that we will beef up our investments instead.

What is the Point?

You might not agree with our decision. That is OK. But even though I didn’t get what I wanted, I harbor no ill will about it. The point is that with this issue, as with any issue, we have a process: we talk it out and respect each other enough to listen and negotiate and come to an agreement. My wife is a wise woman, one I have great respect for. Someday, I suppose, we will learn which one of us was right. But there will be no “I told you so’s" – no matter what. WE talked and WE made a decision and WE are both on board.

In my mind, that is what a great marriage is all about. The best long term marriage insurance I can think of is a healthy process of talking things through, coming to an agreement and living with that agreement.

Even if things don’t work out the way we want, we will manage. We are a team. We do things together. We will figure it out. Together. That is the point.

Readers: How do you resolve money issues in your family setting? Which ones have been particularly difficult? What have you done right?

Creative Commons License photo credit: Candida.Performa

{ 12 comments… read them below or add one }

Darren May 19, 2010 at 12:58 pm

Great post. Money decisions aren’t always about crunching numbers to determine which makes the most financial sense.

Oftentimes, emotions are involved. And while emotions may hinder us at times (like buying stocks high and selling low), other times they DO need to be taken into account.

I like how the two of you came to an agreement together about not having the insurance. If one person were to win the argument and the other lost, then ultimately I feel that both would lose in the end. One person may be resentful, and harmony would be disrupted. It’s great to know that whatever happens, you’ll go through it TOGETHER. Great article.

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joeplemon May 19, 2010 at 4:51 pm

Darren,

I am glad you “got it”…that this post was about marriage and not about LTCI. You are right in saying that if one wins an argument and the other loses, then both lose. This, as you say, is a great recipe for marital disintegration.
By the way, are you married? If so, it sounds like you are set for a long and successful marriage. 🙂

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Arthur @ FinancialBondage.org May 19, 2010 at 5:46 pm

I know Dave Ramsey says we need long term care insurance. I know little about it so I can’t say. I would like to get disability insurance but can’t afford it right now…. Insurance is one of those things we all hate paying… until we need it. Then we are glad it’s there.

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Evan May 19, 2010 at 9:19 pm

LTCi is a very expensive product! To make it worse it seems like companies are limiting their LTCi exposure because they couldn’t have imagined how fast the costs would increase combined with how long people would live.

Not to start a fight with Jan but there are cheaper products which can cut the fight down the middle.

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FinEngr May 19, 2010 at 9:50 pm

Definitely enjoyed the recounting of the conversation with your wife…

I like how you took something that has been “standardized” – checked out the pro/cons & applied it to your own situation.

Since each family/person is different – personal finance can not be a catch-all.

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joeplemon May 20, 2010 at 10:40 am

@Arthur: How well I know that DR recommends LTCI!

@Evan: I stated in the post that our decision is made (and it has) but I have nevertheless been checking into some “cheaper products”. We won’t change our decision, but we aren’t against making new decisions based on new information. 🙂

@FinEngr: Yes, each family/person IS different! That is what makes personal finance personal.

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Roshawn @ Watson Inc May 21, 2010 at 8:05 am

This is certainly an interesting decision. It’s too risky for me, but I do understand the rationale. At least you were able to increase investments.

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joeplemon May 21, 2010 at 11:12 am

Roshawn,
It is risky for me too, but not for my wife. I am glad you understand the rationale, because the purpose of this post is to highlight our marital decision making process, not the decision itself.

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Len Penzo May 22, 2010 at 11:47 am

What I love about this post, Joe, is that it really illustrates how difficult it is for us to make certain financial decisions in our lifetime. When decisions need to made jointly between a man and wife, sometimes things can get even more dicey.

Perhaps we should all take comfort that often there is no right answer and, at times, going with your gut is actually a good enough reason for making certain financial decisions.

All the best,

Len
Len Penzo dot Com

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joeplemon May 22, 2010 at 1:10 pm

Len,

“Dicey” is a good word; financial decisions are about real life, and, as you say, there are often no perfect answers. The best, for now, is discussing the issue, both having a voice, negotiating and finally agreeing… and sometimes the agreement is not about the decision itself but a ratification of our marital process.

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Funny about Money June 2, 2010 at 7:40 am

Wow! I guess a couple has to come together on financial (and other) decisions, even if the result is painfully risky. It’s one reason I wouldn’t think of remarrying at this advanced age. 😉

It’s unlikely that starting a savings fund in your 60s will accrue enough to cover the cost of nursing home care by the time one of you needs it. However, there is another option: divorce. One of my friends had to arrange a divorce for his parents (they were Catholic and had been married over 40 years) so as to preserve a pittance for his mother, who was impoverished by his father’s Parkinson’s disease. It’s too bad to have to do that at the end of your life…heart-rending, one might say. But you have to do what you have to do.

Fortunately the new federal health care plan will offer a long-term care option. It’s pretty minimal and will cost most people more than LTC would have cost had they signed up for a private plan in their 50s. But at least it may be accessible when you get closer to needing it. If you can persuade your spouse to reconsider.

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Justin Poynter December 10, 2010 at 4:51 pm

I get that this post is really about communicating within a marriage, but I’m in finance, so I’m gonna address the LTC aspect. I don’t know how to say this tactfully, so I’ll just be impolitic: she’s wrong.

I like that they talked about it, and I’m glad that they’re at least saving up some extra investment money. That’s also the part that confuses me the most in this situation. LTC is the most dirty, annoying, and personally insulting type of insurance you can buy. It’s admitting to yourself that one day you could end up in that kind of place, and it’s not fun.

It’s easier to tell yourself that you’ll save extra investment money, and psychologically, you can justify that the money will always be there in case of a LTC or other financial emergency, plus you get to avoid admitting the harsh health consequences of getting older.

The main confusion I have when people make this compromise is that it’s a poor use of money. If you’re willing to save money in a fund and not touch it until a LTC event, you’ll lose money everytime. It’s like saving up money while you’re young, in case you die, but it’ll never have the financial leverage of life insurance on yourself. That’s the whole point!

I get it from a marriage point of view, but math and marriage bliss are two different things. Go buy a LTC policy from a rep immediately, before it’s too late. Take your time, do it right, do your due diligence, but buy it. Tie her up if you have to, and tape a pen to her hand. Tell her you get one time in a marriage to put your foot down about something, and this is it. BEG her if you have to.

I’ve never seen normal people in such bad situations as the people who die slowly in America without any money. You WILL care when you are 90. You are not old and desensitized. You will feel every pin prick, and your family will bankrupt themselves to save you from the pain. They will not be able to watch you die like that, and they will literally bankrupt themselves, move halfway across the country, and tear apart marriages to save you. DO NOT make them clean up your mess.

I’m sorry, but though she is being reasonable and thoughtful about the issue, she is taking an amatuers point of view and using some false logic. It makes sense on the surface, but you will rue the day you let her guess about this. GET A PROFESSIONAL INVOLVED.

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