MILLIONS MAY BE AT RISK
We are all living longer. Medical advances, preventative care
and a healthier lifestyle have contributed to an increase in the
average lie expectancy. In the early 1900s, the average life expectancy
was 47; today life expectancies are 74 for men and 80 for women.4
INCREASED AWARENESS
Enhanced media coverage, the introduction of the federal government's
long term care insurance program offered to federal government
employees and an aging population has increased public awareness
about long term care.
• Roughly, 75% of Americans are familiar with
the major long term care options.7
• Seven in ten adults over age 44 think it
is very important that people have either some type of private
insurance or coverage by a government program for long term expenses.8
• 71% of pre-retirees know that long term
care insurance can be purchased from insurance companies.9
• 83% of pre-retirees know of someone who
is currently or was recently receiving long term care in a nursing
home, assisted living facility or at home.10
Unfortunately, increased awareness does not always
translate into action. Pre-retirees know they are aging. They
also know that the cost of care can be substantial and that they
likely will need care at some point, yet few still take the proper
steps to prepare for it.
• Long term care is the largest unfunded liability
in the United States.11
• 94% of all Americans are without long term
care insurance.12
Many pre-retirees are in denial and just don't want
to think about it. It's up to you to educate them and show them
that planning for long term care is just as important as saving
for retirement or a child's education.
PERSONAL EXPERIENCE
Pre-retirees may be familiar with long term care if they have
had to help parents, grandparents and other relatives or friends
confront this need. They know they could find themsleves int hat
same position in 20 years and may be thinking, "When I'm
in this situation, what will I do and who will take care of me?"
• 20% of middle-aged households include at
least one elderly parent who cannot be left alone and needs help
with activites of daily living.13
Most people don't want to be a burden to their spouse,
children, relatives or friends. They want control over their future
and the peace of mind that comes from planning.
SOMETIMES IT DOESN'T PAY TO WAIT
The need for long term care can strike at any age. Increasingly,
Americans are buying long term care policies at younger ages.
One of the reasons is because the younger you are when you purhcase
long term care insurance, in most cases, the less costly it is
likely to be. Pre-retirees can see the savings by comparing the
potential out-of-pocket expenses for long term care services to
the actual cost of long term care insurance premiums.
By buying at a younger age, many also avoid running
the risk of developing a condition that might prevent them from
getting coverage.
• Two out of ten people are turned down for
long term care insurance because of medical reasons.14
In most cases, you can't get long term care insurance
once you have a problem that requires long term care.
MAKE IT PART OF A PLAN
Pre-retirees don't necessarily view long term care as just another
insurance policy.
• One in three buyers say he or she buys coverage
to protect and preserve their assets and estates.15
They tend to think of long term care insurance as
a piece of their overall financial or estate plan.
"I CAN'T AFFORD A POLICY."
For many, the biggest obstacle to long term care insurance is
not cost but lack of knowledge. Many people underestimate long
term care expenses. They don't come to terms with the fact that
the high cost of care can be one of the biggest threats to their
future financial security.
• 62% of pre-retirees have at least one serious
misconception about who provides long term care coverage or the
conditions in which coverageis offered.16
• When asked how they would pay for long term
care in the future, 24% of adults over age 44 were unable to name
a source.17
What's more, most people do not know what long term
care insurance really costs and tend to overestimate the cost
of premiums. They need to know that although actual premiums may
vary widely, it may take just one year or less of claims to recoup
a lifetime of premiums.
"MY KIDS WILL TAKE CARE OF ME."
Many people do not actually consider the real consequences of
this option. Would their children be comfortable helping them
to bathe or dress? Could they physically move them from a bed
to a chair? If the care drags on too long, would their children
be able to handle the stress on themselves and other members of
the family? When questioned, many realize that ultimately their
children's lives are already too busy and complicated and they
really can't rely on them for their long term needs.
"I'LL SELF-INSURE."
Although many of your more affluent clients and prospects may
think they want to self-insure, maybe they might want to think
again.
If you have clients with $1 million in assets, it's
easy to see that a stay in an assisted living facility or nursing
home can erode their nest egg quickly. The real question for them
is "Would you rather pay the predictable premium on a long
term care insurance policy or do you want to cross your fingers,
hope for the best, and pay the unpredictable cost of the care?"
Anyone with assets to protect would probably prefer
to leave them to family, friends or a charity instead of a nursing
home.
"I DON'T WANT TO PAY PREMIUMS FOREVER."
Some of your pre-retiree claims may not want to buy long term
care insurance because they don't want to pay premiums for the
next 30 years. Prudential has addressed this need by creating
a long term care insurance product with many payment options including
a way to pay off the policy in ten years or at age 65.
"I'LL RELY ON THE GOVERNMENT."
Many believe that medicare or Medicaid will pay for long term
care needs. Medicare services are extremely limited and were not
designed to pay for extended long term care. It should not be
counted on as resource. Medicaid is designed to pay for nursing
home care only for those who are very poor. To qualify for Medicaid,
individuals must "spend down" their assets, in many
cases to just $2000. If protecting assets is an objective, then
Medicaid is generally not an option.
"I'LL TAKE MY CHANCES."
What would you think about someone who told you they had no homeowners,
health, or automobile insurance? Remember, the probability of
a house fire is about 1 in 1200. Having a major auto accident
is 1 in 240. Needing long term care is 1 in 2!18
Just do the math.
THE BOTTOM LINE: IT'S TOO BIG TO IGNORE
The pre-retiree long term care insurance market is poised for
enormous growth - so get serious and don't be left behind.
1 United States General Accounting
Office, Long-Term Care: Aging Baby Boom Generation Will Increase
Demand and Burden on Federal and State Budgets. David Walker,
March 21, 2002. P.1
2 The ABCs of LTC. On Wall Street-online,
Nancy R. Mandell, July 1, 2003 P.2
3 "Getting Ready" - Investment
Advisor, September 2003. P.100
4 U.S. Life Expectancy Rising with
Health Care Costs, The Washington Post-online, David Brown. October
5, 2003.
5 Agency for Healthcare Research
and Quality: Long-Term Care-AHRQ publication no. 02-MO28, March
2002. P.1
6 AHRQ Focus on Research: Long-Term
Care. Publication #02-MO28. March 2002. P.2
7 "Americans Fail to Act on
Long-Term Care Protection" Business Editors, San Francisco
Business Wire. May 23, 2003. P.1
8 Long-Term Care Insurance Survey
Executive Summary. RoperASW. September 2002. P.1
9 Long-Term Care Insurance Survey
Executive Summary. RoperASW. September 2002. P.1
10 Long-Term Care Insurance Survey
Executive Summary. RoperASW. September 2002. P.1
11 A Market Dawns for Long-Term Care
Coverage, Molly Butler Hart, IA Magazine.com. April 2002. P.1
12 www.citizensforltc.org. September,
2003
13 HRQ Focus on Research: Long-Term
Care. Publication #02-MO28. March 2002. P.2
14 "Getting Ready" - Investment
Advisor, September 2003. P.101
15 "LTC Insurance: How Much
Do You Know?" Tracey Longo, Financial Advisor, February 2002
16 "Americans Fail to Act on
Long-Term Care Protection" Business Editors, San Francisco
Business Wire. May 23, 2003. P.2
17 Long-Term Care Insurance Survey
Executive Summary. RoperASW. September 2002. P.1
18 "About Long Term Care,"
Thomas Day. longtermcarelink.net. September, 2003 P.3
19 Society of Actuaries Issues Study
on "Retirement Risk". March 12, 2002. P.1
(Availability of features and options
varies by state. Premium will vary with choice of benefits selected.
For costs and complete details of coverage, call Approved Management
Concepts.)
