Long-Term Care Insurance Stories

Comments on “Understanding the Role of Long-Term Care Insurance,” an interview with Howard Gleckman, in the March 2025 AAII Journal:

We purchased a long-term care insurance policy through Genworth Financial 20 years ago. Oh, have times changed since then. Due to numerous issues, we’ve now accepted a payout that’s only a little more than what we paid in. It’s important to keep in mind that this is an insurance policy, which means it’s a transfer of risk. If investors/retirees have enough money to self-manage their risk, it’s better to avoid a policy or look into a hybrid policy, which is expensive.
—Colleen M. from North Carolina

If you have a significant financial base without insurance, are you better to just pay your own way? This is not an easy analysis given the available data. The issuing company has to pay for some significant claims over pay-ins, plus administrative costs and profits. Accordingly, the average policyholders are going to get substantially less than they pay in. You need to know where you fall in the risk pool.
—Thomas M. from California

Those with moderate assets—say $500,000 to $1 million—generally cannot afford the $22,000 per year premiums in my state, and those premiums only cover about 25% to 50% of those assets. My calculations show that self-insurance is a viable option for anyone with over $1 million in assets. For those with above $2 million in assets, it’s a no-brainer. I converted some aging life insurance policies into second-to-die policies with cash value buildup. In Wisconsin, nursing homes cannot touch life insurance proceeds as long as the beneficiaries were designated at least five years before the person entered into a skilled nursing facility. We use this insurance as a legacy gift so that, in the absolute worst-case scenario, the grandkids would get at least something of significant value. I’d rather pay $22,000 per year in whole-life premiums that build cash value than on long-term care insurance products that protect a mere fraction of our joint assets.
—Craig B. from Wisconsin

I have a long-term care policy, and I have concerns about the difficulties my wife would encounter claiming benefits for me, if needed. I have advised her to engage a professional who would manage the claims process for her. I gather from online reviews that long-term care insurance claims assistants can be expensive. Personally, I think it may be worth it, knowing that my wife would be relieved of the aggravation during a stressful time. Apparently, the American Association for Long-Term Care Insurance can direct you to a local claims assistant organization. (I suspect they get some type of referral compensation for that.)
—Michael D. from New Hampshire

I have a long-term care insurance policy for both me and my spouse. Last year, the company gave me a choice between keeping my current plan with a significant increase in premiums or the same premium with reduced benefits. I took the latter since I’ve been torturing myself over the value of any such policy since I started paying into it some 10 years ago. Right now, I view it as a helper since I can likely afford to self-insure one of us ... time will tell.
—David B. from Utah

Applying the Level3 Withdrawal Strategy

Comments on “Using the Level3 With­drawal Strategy to Achieve Growth and Stability,” by Charles Rotblut, in the March 2025 AAII Journal:

This is very similar to my experience, as this is exactly what happened when I retired in 2006. I worked part time from 2009 to 2011 and rebuilt my portfolio with added contributions. I also built a cash buffer. I subsequently read James Cloonan’s “Investing at Level3” book and adjusted my strategy to his recommendations, particularly the size of the cash buffer. It has worked well for 15 years. The cash buffer requirement grows over time as inflation and my lifestyle changes. I have established my own transfer rule, which is annual transfers at (near) market highs. With age, I have moved the buffer to five years, but I otherwise remain fully invested in equities. The book was a great investment.
—Bert M. from Arizona

In ”Investing at Level3,” Cloonan says that the Shadow Stock approach should return 15% per year, on average. I am being conservative and using a value of 13%. Assuming a 5% inflation rate, this means that I have a usable income of 8% from my stocks (13 – 5). I wrote some software that computes the Line of Reasonable Expectations (see Figure 4.5 on page 134 of the book). So, every quarter, I withdrawal 2% of the current value on this line (when not in a bear market).
—Phillip G. from Florida