Suze Orman's $25,000 per month mistake

[NNN0LHI]

http://www.suntimes.com/lifestyles/splash/14511877-418/suze-orman-reflects-on-a-missed-investment.html

By SUZE ORMAN Daily Splash columnist August 20, 2012 9:34PM

In 2004, my mom needed to be moved into an independent home for the elderly. Chicago winters had become just too rough for her, so I decided to move her to South Florida. She would only go if I moved with her, and after spending many years living in Northern California, I did just that.

The last few years have been difficult; I have watched my mother go from being a strong, independent and active woman to being someone who cannot make a move without the help of her aide. She is now 97 years of age, and even in her frail and fragile state she still has a strong desire to live.

When my dad died 31 years ago, my mom was only 66 (five years older than I am now). I was just one year into being a financial advisor, but I had already witnessed clients who would spend all the money that they had earned over a lifetime on a long-term care stay. I saw this with my own grandpa and grandma as they spent their last days in Drexel Nursing home on the South Side. So, when it came to money, the only thing I really ever asked my mom to do was to let me buy her a Long Term Care Insurance Policy (LTC).

For those who do not know, an LTC insurance policy covers expenses if you move into a nursing home, or home care if you no longer can do what they call “the activities of daily living,” such as feeding and clothing yourself. Your health insurance will not pay for it, Medicare in most cases will not pay for it and you really don’t want to be on Medicaid.

[physioex]

1. I vaguely remember reading a Consumer Reports article on this topic....

I think it mentioned that getting LTC insurance was unnecessary until your late 60's. I have serious doubts about her motives as she could be promoting an insurance company agenda.

[madaboutharry]

2. Suze Orman is a multi-millionare.

Her mother isn't the real issue because Suze Orman can afford to give her mother the best of care. I am suspicious of her motives for writing this article.

[enlightenment]

7. My dad started buying LTC insurance for himself and my mother before he retired

16 years before they both died last year (they were both 89). The policies promised to provide four years of care for my mother and three for my father (actuarial tables and all that), including nursing home care. He paid in a total of $64,000 for both policies.

They never went into a care facility, and my dad outlived my mother by 8 months, but the policy provided respite and home hospice care; paid for a variety of medical equipment including hospital beds for both of them when the time came; and, for my dad, paid for a home helper who was in the house five days a week, from 8 to 4:30 (she did shopping, laundry, and light cleaning; cooked his breakfast and lunch; and allowed us to continue working - which we would have been very difficult without her aid).

They never argued a single claim, paid promptly, and - when they died, sent handwritten letters of condolence to us.

I'm not sure if Orman has an agenda, but every day I thank my dad for having the foresight (and the financial wherewithal) to spend that money in advance to ensure that their final years (or year, in their case) was not burdened with worry on top of grief. I don't care if that was our 'inheritance' - the help it provided was worth more than all the money in the world.

I feel so very, very sorry for anyone that has to face their final years - or their parents - without some sort of safety net. I'm not a fan of insurance at all, but in this case - at least with this company - it was absolutely worth it.

Did they make a profit? Of course they did. I haven't tallied the cost of that final year, but I doubt that it came close to what my dad paid into the policies. So be it. Had they lived longer and run out of benefits I'm sure I would be singing a different tune - but it worked out okay.

[Hassin Bin Sober]

9. I've been in consumer finance/credit for 20 plus years.

I've heard S.O. say some smart/ok things - usually in the "duh" category. But I've also seen her give out some stupid advice. To me, she seems like the local newspaper "consumer" reporter who regurgitates the same "advice" over and over - but some people worship her.

I don't know much about LTC policies. But I DO know for-profit private insurance companies don't give money away.

I would like to see the numbers crunched as to how much money she would have spent over 30ish years of policy premiums versus how much the insurance would ACTUALLY pay out (probably not the $25,000/year nut Suzie cracks on her mother's behalf).

Balance that with people who pay for years but never get to use the policy or only spend a couple months in the nursing home before death.

Or people who pay for the policy for years and drop it when things get really tight. I.e. in retirement or in the event of an (non LTC) illness.

[flamingdem]

3. I'd be careful, she's doing tv commercials

and I think it's for this but I'm not sure.

[mchill]

4. What happens if the insurance company goes under?

The premiums for LTC are steep.

[Warpy]

5. She's right about one thing, you can't get it if you have health issues

so if you know your genetic timetable for developing the diseases of aging like COPD, heart failure, cancer or Alzheimer's, you'll know just about how much you can delay purchasing it if that's your thing.

What I really question in this article is why it's costing her $25,000 per month. It's usually a tenth to a quarter of that for skilled nursing home care and far less if the person is being cared for by support at home, depending on the care facility.

Suze, I know it's your mom but you can surely do better shopping than that.

[pnwmom]

6. I know someone who cost far more at home than he would have in a nursing home.

(About $150K a year for around the clock care. I knew one of the care-givers, so I knew what she was paid.)

And I've looked into nursing home care in three states and haven't seen anything that would be as low as $2500 a month. $5-8K at the lowest.

In an Ohio city, for example, even basic assisted-living started at close to $4,000 a month; nursing home care was more.

[Ruby the Liberal]

8. Please be careful with this and DO YOUR HOMEWORK

LTC can be very lucrative to the insurance company - if the policy is never used.

If anyone is looking into a plan, make sure that you are looking at options like return of premium and/or principal for this reason. There are several companies who offer these options. Take your time and compare.