Imagine spending 10 years in a confined situation. If I need help to get through daily chores and get shopping done, what can I do?
I can set aside money and "self insure" and then I don't have to be "checked out" to see if I qualify. I can take the money to pay for my health care people.
I can give $1200 a month to a company and they have the task of paying for my caregiver.
$400 a day x 365 days = 146,000 a year. If I'm in capacitated for 10 years, that's 1.46 million someone needs to pay for.
I can set aside $700,000 and in 20 years it can grow to be $1.5 million.
OR I can give $1200 a month or $15,000 a year for the next 20 years to a company ($300,000) and they have to pay $1.46 million.
If I self-insure, I get the flexibility of deciding when I pay out.
If I pay $300,000 over 20 years to a Long Term Care provider, I have to fight and prove that I need the support to get my money.
What could I do with $300,000? That money is gone to the Long Term Care provider. I also have the possibility that I might never need Long Term Care.
If I don't, I still have access ot the $300,000 in premiums that I would have paid because I have set aside the money and I can draw down the money anytime.
Put 1 million with Hightower, let it grow for the next 20 years, perhaps at age 87 I start to need the support of $400 per day for a care giver, I can draw down $146,000 a year.
2015 give hightower $1 million
2033 Value is $2 million (or more) and I pay from that amount the $150,000 a year for my support.
2038 I've spent $750,000 over 5 years and my fund is still $1.25million. I can go on cruises!
If I rely on the Long Term Care company, I continue to pay $15,000 a year between 2033 and 2038 so I pay out $75,000 (plus the 20 years of premiums of $300,000) and I can get the company to pay for my caregiver.
Positives: someone else is paying the $150,000 a year
Negatives: they got to use my money during the 20 years
I've given away $300,000 to have this coverage.
The Long Term Care Calculator
Conclusion: there is more flexibility in protecting and self-insuring.