Comments on: How much for lifetime health insurance?

By: OregonJon

OregonJon — Wed, 15 Jun 2011 01:23:51 +0000

Good question. A single premium health insurance policy for, say a child who turns 21. The real reason for such a policy would be to protect the fortune the child inherited. There is no need for low co-pay cover, so all that is required is catastrophic health care with a high annual deductible, say $50,000 minimum. It could be more.

We could probably price an annual catastrophic health policy today (it’s not my field) and consider the single premium policy to be little more than an annuity to make the premium payments. It’s not quite that simple since inflation, life expectancy and other factors that come into play over the expected life span need to also be factored in.

It’s a nifty idea but the market is probably not of sufficient size to be attractive to any insurer and the upfront premium is so large, given today’s interest rates, that financially savvy buyers would just as soon bear the risk themselves.

By: q_is_too_short

q_is_too_short — Tue, 14 Jun 2011 20:55:57 +0000

the only 100% sure way to insure your health until the end is sure, wilful death. excepting that, there are uncertainties.

By: Beezer

Beezer — Tue, 14 Jun 2011 13:25:15 +0000

That the question is being asked brings up the virtue of universal, single payer healthcare.

The wealthy simply self insure above the universally provided health care.

By: yorksranter

yorksranter — Tue, 14 Jun 2011 13:15:26 +0000

It’s quite easy to become a British citizen if you’re rich. Buy suitable lodgings in London, move some money into a bank here, wait a couple of years and don’t get caught doing anything illegal. Then apply.

By: right

right — Mon, 13 Jun 2011 20:05:00 +0000

Forget the inheritance — he makes his children use a Zune instead of an iPod! No amount of money or healthcare can make up for that.

By: klhoughton

klhoughton — Mon, 13 Jun 2011 19:46:34 +0000

Depends on how he plans to deal with grand^(n)-children.

Setting up a trust to provide more spending money than the person would ever need is easy. Setting up a trust that pays all uncovered-elsewhere health care expenses (e.g., school health care during university days) is A LOT more difficult.

To take the easiest question: what happens to the balance on death? Does the trust function the same for the deceased descendants? Or do the funds get bundled into one.org or the Gates Foundation or the Michelle Rhee Reputation Rehabilitation Fund? (Oh, wait, I repeat myself.)

What if the insured’s child (Bill and Melinda’s grandkid) is severely injured before the parent’s death? Will they be covered then? Or after the parent’s death? Or do both parents have to die? Etc.

The “Medicare Trust” structure isn’t good for the specific. I’m certain they can set up the Gates Foundation or some similar entity s.t. direct descendants of Melinda have out-of-pocket health care expenses covered in perpetuity–but that doesn’t sound like it’s the goal, which will make the contingencies a mess.

By: fresnodan

fresnodan — Mon, 13 Jun 2011 17:54:08 +0000

How long does Gates expect to live? It will be interesting if the estate gets sued by the children – I would bet at least one, and in all likihood, all of the little darlings will file a suit to get the bulk of the estate.
The best opportunity that these children will ever have to make a forture is hiring a good estate attorney

By: Ragweed

Ragweed — Mon, 13 Jun 2011 17:12:14 +0000

I would lay odds on some sort of trust as Rob Sterling suggests. It would not necessarily need to even purchase health insurance, but simply be available for excessive healthcare costs. The assumption could be that the (grown) kids would access health insurance through employment or purchase individual plans on their own income, but have a large pool of money to fall back on in the face of excess medical expenses. I wonder if it could even be established as a charitable remainders trust?

By: dWj

dWj — Mon, 13 Jun 2011 16:22:24 +0000

You’re facing some pretty long-term credit risk against this insurance company, and I wonder, as was to some extent the case with the parties that ended up buying AAA CDO tranches, whether you especially don’t want to trust the company that is willing to sell you this.

By: jfruh

jfruh — Mon, 13 Jun 2011 15:27:26 +0000

Even if you stuck that $10M into a savings account that earned 3% (higher than what I get from my bank, but I’m betting you can do about that well if you have $10M to plunk down) you’d make $300K a year. I’d feel more than comfortable living on that indefinitely.

Of course, you’ve got to take inflation into account … if you start in 2011 w/$10M and an “allowance” of $250K a year (more than enough to have a comfortable middle-class lifestyle, including health insurance), earn 3% interest on your money and then increase your allowance 5 percent a year, you’d run out of cash by 2040. But of course someone w/$10M to invest is going to do better than 3% a year. Bump it up to 6 percent and you make it to 2060. I’m sure there’s a strategy that can run the clock out on your life on ths money (and 5 percent inflation is probably kind of high.)

By: RZ0

RZ0 — Mon, 13 Jun 2011 15:15:57 +0000

Present value of $5K inflating at 2% over a lifetime, divided by .85. Other than pre-existing conditions – I assume none – there’s no real adverse selection here, since few people want to maximize their health costs, since that involves getting chemotherapy and long, boring hospital stays.

By: sammartin

sammartin — Mon, 13 Jun 2011 15:01:41 +0000

How much would it cost to help his daughters become Swedish citizens? That would take care of all future health care costs for them and their children.

By: RobSterling

RobSterling — Mon, 13 Jun 2011 14:56:32 +0000

A testamentary trust fund with sufficient capital could obtain health insurance for the beneficiary, as well as pay out costs exceeding what’s covered.