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My mother-in-law (in her 60s) has no assets, and a pension (state and Social Security combined) of less than $700 month when she retires.

Currently, I'm paying for LTCI ($150/day, 90-day elimination, 5 years of benefits, premium $110/mo) for her.

My wife and I do not want her to end up in state-run nursing homes due to the low quality of care that may be provided. Our ideal for her is an assisted living facility or paid in-home care when she needs assisted care, which hopefully would not be for 20 years or so.

MILs daughter recently married Rich Guy who bought MIL a new car and hired MIL in his company, doubling her previous salary. The situation I don't want to run into is one in which, twenty years from now, Rich Guy jumps in to save the day and pays for care himself, therefore leaving me with $30,000 in premiums gone down the drain.

Being young, I'm not sure how this has been navigated by others and I am currently having second thoughts about the LTCI. Should I cancel the insurance, hoping that the state will be solvent enough to provide a basic level of care? Should I cancel and save the premiums in an investment that can be used for her care later?

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    Assuming the daughter who married the rich guy is your wife's sister, your wife (and probably you as well) should discuss this matter with her and her husband. It makes sense for all children (and their families) to be part of the process of planning for their parents' care, and this will allow you to get their take on the issue.
    – BrenBarn
    Commented Aug 12, 2014 at 19:21

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Well, insurance is insurance. It may or not be needed, but if it is, you need the insurance. Monetarily to you, what is the difference between Rich Guy paying for LTC in 20 years and MIL dying in 20 years before using the insurance? You are still out the premiums and she didn't use them. However, if Rich Guy doesn't pay and you don't have the insurance, then you either pony-up real money or she goes to a welfare home.

If it were me I would have a talk with Rich Guy and MIL daughter and see if they would be willing to pay or share in the payment of the LTCI. Regardless, If I were this Rich Guy, I would still be willing to let the LTCI cover what it can cover before I began paying, so it shouldn't be wasted. Rich Guy has hired her, how about talking to her about LTCI? Is she OK with staying in a welfare home? Can she pay the LTCI premiums or share with you and Rich Guy?

As for investments, for the monthly amount of $110 over 20 years you would need to get a return of almost 20% to match the 5 year LTCI benefit of $270K. Highly unlikely.

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