A report by AHIP and Lifeplans, two highly reputable entities, came out at the beginning of 2017 that studied which consumers chose to purchase long term care insurance (LTCi) over the last 25 years. They wanted to determine “Who Buys Long Term Care Insurance” and what has changed in the marketplace over time.
They looked at purchasing trends, attitudes around the need for long term care, the perceived role of the federal government, family responsibility and protecting a legacy. One thing is certain: the need for long term care is being more widely recognized.
This report has a ton of valuable information. To read the juicy details, you can read the full results here. For now, let’s take a look at Buyers vs. Non-buyers.
Do You Fit the Profile?
- Buyers are more likely to be married, college-educated, working, and have high income and assets.
- Non-buyers have slightly lower assets. This is echoing what we see every day in our business. There has been a shift in LTCi sales to a much more affluent client than 25 years ago.
Opinions & Attitudes
- Buyers are planners. Buyers are more likely to think that they will need LTC in the future in comparison to non-buyers. Conversely, non-buyers choose not to plan for their future medical needs.
- Buyers worry less about paying for LTC services than non-buyers. Non-buyers understand that if they need LTC services, the government will not be paying for it, although many non-buyers mistakenly believe that their needs will be provided for by the government.
- Buyers tend to believe that they will probably require care in a nursing home or in their own homes at some point in the future. Non-buyers don’t think this is need will likely arise in their lives.
- For non-buyers, cost is the major barrier to becoming a buyer. This hasn’t changed in 25 years. Other reasons include: skepticism about insurance companies, lack of understanding of the real risk of LTC and confusion about what the state and federal governments will or won’t pay for.
- Most buyers would prefer smaller, more frequent rate increases than larger, less frequent rate increases.
- More than ¾ of non-buyers would be interested in purchasing LTCi if they could deduct the premium from their taxes. They believe that the government should encourage people to buy LTCi by making it fully tax deductible.
- Non-buyers favor a government stop loss program of catastrophic coverage where they would buy a smaller LTCi policy that would wrap around a public program. Members of the general population believe in the public financing of LTC.
- For non-buyers, ⅓ don’t plan to purchase in the future, but ⅔ do plan to become buyers at a later date. These later buyers view LTCi as part of a retirement plan and believe that they can postpone becoming buyers until they are closer to retirement.
- Most buyers understood that waiting resulted in higher premiums, so they started years before The majority of buyers cited the reason they didn’t delay this purchase until retirement was their understanding that the cost of insurance would increase in the future.
- Most buyers don’t buy without seeking advice from other people. Those who most impacted their LTCi buying decision were their spouses/partners and their insurance agents. Most recently, financial advisors are becoming more influential in this decision-making process.
- 70% of non-buyers say they would be more interested in becoming a buyer if they were able to comparison shop on the internet.
What we see consistently, for over 25 years, is that the #1 reason people buy LTCi is for preservation of assets.
So… Who buys long term care insurance? Maybe you!
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