Kevin and Melissa,
Below are your updated long-term care (LTC) insurance quotes and a short explanation of how I determined each option.
💰 How much insurance?
As a quick reminder, here’s what assisted living in Austin is projected to cost with a conservative 4% annual increase:
- 30 years -> $259k (Melissa's quotes are ~ $230k)
- 34 years -> $303k (Kevin's quotes are ~ $250k-$290k)
As we discussed, these projections assume a 4% annual growth rate. Over the past 20 years, long-term care costs have risen by an average of 4.5% per year—and by 10% just last year. Memory care typically runs a bit higher than standard assisted living.
If you’re adding coverage, don’t overshoot with reimbursement plans (like OneAmerica), since those benefits are capped by your actual care costs. Overshooting with cash indemnity plans (like Nationwide) isn’t as much of a concern—your benefits aren’t limited to what you spend on care.
🔎 Melissa quotes
As I mentioned on our call, Nationwide launched CareMatters Annuity this week (October 13). During the health pre-screen, they indicated Melissa could qualify at preferred rates. 👍🏻
Here's a comparison.
OneAmerica (Option A) provides higher total benefits if care is needed for eight years.
Nationwide (Option B) offers several advantages:
- Cash indemnity payouts
- Higher benefits during years 1–2
- Benefits paid over six years instead of eight
- A higher death benefit
- The first 90 days of benefits are paid retroactively in month 4
A few related notes on this decision:
- If Nationwide assigns a standard rating instead of preferred, benefits would decrease by roughly one-third. This rating should not affect a future application to OneAmerica’s Annuity Care.
- Nationwide allows a maximum purchase of $400,000 for its annuity product, compared to $300,000 for OneAmerica.
- I do not recommend OneAmerica Asset Care, as its benefits are lower than both of these options.
- For Nationwide, the breakeven of 3% ("no inflation protection rider") and 5% growth is age 80. For either option, you could increase your premium from $200k by x% and benefits would increase by roughly x%.
🧐 My recommendation: If your goal is to maximize total potential benefits, OneAmerica is the stronger choice. If you’d prefer greater cash flexibility and additional features, Nationwide is the better fit.
🔎 Kevin quotes
I ran quotes comparing Nationwide CareMatters at 3% and 5% inflation with Securian SecureCare at 5% growth.
The Nationwide plan with 5% growth provides higher benefits as you age and the likelihood of needing care increases. I’ve updated your quotes to show projected benefits at age 80, instead of age 76 as in the previous version.
🧐 My recommendation: If your goal is to maximize total potential benefits, OneAmerica is the stronger choice. If you’d prefer greater cash flexibility and additional features, Nationwide is the better fit.
As I look back at my notes, my recommendation is the same for both of you. 😀
💵 Payment options
For Melissa's options, they must be paid in a lump sum.
For Kevin's options, they can be paid over time. The below schedules can be found in your illustrations.
OneAmerica Asset Care:
- Go with 5-pay only if your after-tax return on safe assets is above 8.6%; if not, single-pay is the better deal.
- Go with 10-pay only if your after-tax return on safe assets is above 5.7%; if not, single-pay is the better deal.
Nationwide CareMatters:
- Go with 5-pay only if your after-tax return on safe assets is above .8%; if not, single-pay is the better deal.
- Go with 10-pay only if your after-tax return on safe assets is above 2.6%; if not, single-pay is the better deal.
I hope this is all helpful in making your decision. Let me know if you have any questions prior to our call on Friday.
Thanks,
Jesse