chisue, insurance companies don't make money strictly off policy premiums. AIG's current headline news is a perfect example of this. When I worked at CIGNA (formerly Connecticut General, then they bought INA and changed their name), each of their 5 separate divisions was given an annual profit margin target to hit. This was called a "zero margin plus xx%". Note this was not a sales number, it was a "quick and dirty" percentage of how much revenue minus division expenses they made annually. My boss (one of the regional VPs with a shot at the division presidency) got interested in exactly where this target number came from. He learned that what CIGNA called "zero margin" was actually a base 15% profit margin. CIGNA could earn 15% off its money, through investments and such things as real estate development (for instance they bankrolled Foster City, a landfill development in the SF Bay Area that was considered risky at the time, but is now a desirable mixed-use suburb, selling it after a few years for a hefty profit), without ever writing another insurance policy. Therefore, their divisions had to earn OVER that 15% profit margin, to be worth expending corporate funds for. This is why insurance companies go in and out of market niches - they tend to keep a fairly conservative eye on what their profit margins are on each line of business. When people are discussing the stock market, the majority of money in it is institutional. Insurance companies are a very large part of that. They are even better than banks at leveraging their money. We used to make jokes about actuaries, but insurance companies realistically suvive on the number-crunching abilities of their actuaries. Like developers in a software company, they are what actually drives the financial corporate engines.

Yes, but his information is accurate, so at least it lets Mary know a little bit more as she continues her research. I agree Mark has breached the terms of posting here, but sooner or later Mary's got to talk to an agent or broker to get some idea of whether she even qualifies for an LTC policy, aside from type and price. One can only go so far in continuing to post discussion threads. The trouble with LTC is that people talk about it and talk about it, but very few people actually do it. When people talk about financial planning, this is why I keep insisting that it has very little to do with ROI. True financial planning is mitigating your personal risks against not achieving the retirement lifestyle you want to have. If your LTC risk is high, as ours was, and you don't take steps to mitigate it, your financial planning was and is, inadequate. If you have a high risk of needing help with LTC and haven't budgeted properly for it - whether self-insuring or buying some type of LTC insurance - you are playing dice with your money and possibly involving some risk to those who would need to help take care of you. Mary's got the right idea - you want to deal with a company that is solid and reliable - but she's participated in many LTC discussions over the past four years, and still has yet to 'pull the trigger.' LTC insurance just keeps getting more expensive, and if one waits too long, sometimes the decision gets taken away, by a health issue that precludes getting any affordable LTC policy of any type. I have a sense of urgency about it, because I personally have friends/family who were offered LTC insurance in the last ten years and turned it down, and now that they're closer to retirement, honestly admit they regret not buying it. Now they're terrified, and rightly so...but it's too late for them. They're medically rateable, and can no longer afford it.

We bought LTCI last year at the ages of 49 and 51, and we're glad we did. I did not go into this with eyes half shut. I did uncountable hours of research, attended seminars, talked to people, interviewed agents, etc. I'm the type of person who doesn't allow anyone to talk me into anything - period. We bought a great policy through an A++ rated company, John Hancock. The average age one should buy LTC is 60ish - before health problems begin and the premiums are outrageous if you can even get it with certain conditions. I wasn't waiting 10 years to do so especially since our premiums would double by then even if we remain healthy...but who knows how our health will be in 10 years. Sure, we're healthy now and healthier than our parents were at this age, but no one has a crystal ball to determine how our health and at what age, will affect us. I'm not taking chances knowing DH's parents history. We have no kids or family that will care for us should we need it now or later, and to put 100% burden on the other spouse isn't fair, IMO. And even if we did have kids, who's to say they would want to interrupt their lives to care for sick parents. As cruel as this sounds, I prefer not to care for my mother as she's a difficult one now and she's relatively healthy. This LTC is piece of mind for us. While humans are living longer these days, from my research, it states that a very high percentage of people will require some kind of nursing home facility and the average time is 2.5 years. Should that time come now or later, the insurance is already there to be used. If we were to invest $$ for a rainy day to use toward this, it will take A VERY LONG TIME to match what insurance money is available to us NOW. We hope to never have to use it, but good to know it's in place if we have to, and we're lucky enough to be able to afford it. I realize many cannot. There's much to know about the various companies offering this including their ratings, how their policies work with the options & riders offered, claims stats, etc., and then choosing what is right for each individual. While most people tend to not think about LTC or discount it all together, I really think more people should learn about it and give it serious consideration. (No, I don't sell it). Frankly, IMHO, your sister is wise in thinking about her elder years that way.

Like Jim_1, we evaluated our risk profile for morbidity and decided on buying it. We have the equivalent of "Cadillac" LTCi (I guess that might be Mercedes-Benz or Bentley, these days, lol), purchased through the state pension fund which polices the LTC carriers very strictly. It's costly. But we knew that going in. I'd worked in insurance for almost 20 yrs and still have friends in the industry, including corporate actuaries. I told DH that the original pricing was too low and we should be ready to budget for premium increases in the future. Those increases have happened, and fortunately we're still able to afford the premiums. We have no intention of letting them go. Our morbidity risk is still high. In 2013 we moved my MIL to a wonderful full-care senior facility. She had early dementia but was fine with a regular daily routine. She was a sociable sort but shy about making friends on her own, so the facility was great for her. She was age 85 when she moved in, and sure she was still "too young" for this place. Imagine her shock when she was seated at a dining table with three other residents, and she was the YOUNGEST. One of her new companions was 100 yrs old and had been living in the facility for 30 years! Because MIL needed to have enough $$$ to afford Memory Care as she declined, we were and still are, conversant with what facilities charge for Skilled Nursing and Memory Care in our area. Interestingly, when we were researching facilities for MIL, there was little difference in the Asst. Living monthly rents, although costs for services varied, between the for-profit and non-profit facilities. But when looking into SN and MC units, the difference was substantial, to the tune of more than $3K/monthly. It had nothing to do with the quality of care; the non-profit we selected for MIL was one of the more reasonable ones yet is rated 3rd in the state. In 2015, the cost for SN/MC at this facility was $8500/mo. You need to remember although this cost is inclusive of all medical services, personal items and some extras deemed non-essential are NOT provided by any facility we interviewed. Such items, for increased comfort or emotional support, are the responsibility of the resident or resident's family, so that is an additional cost. It should also be noted that all the facilities we interviewed did not accept Medicaid patients at all as initial residents. All of the non-profits and a couple of the for-profits said their policy was to apply for Medicaid for residents who eventually ran out of funds (helping defray those SN/MC costs is one of the major expenses in a facility's General Budget). Some of the for-profits, however, said if a resident ran out of funds, they were asked to leave. These facilities would contact the state to arrange for a transfer to a Medicaid facility that would accept the resident: no choice of where to go, btw. As pointed out above, if you think there is any risk of needing Medicaid, it would be wise to find out the laws in your state, AND STAY UP TO DATE ON THEM. Medicaid is 50% federally funded and is always dependent upon the goodwill of Congress for its funding. Currently 80% of the U.S. elderly in SN and MC facilities are being funded by Medicaid. HTH.