Long-Term Care (LTC) Planning Studies

Similarly, a recent survey from OneAmerica® found that 84% of consumers are at least slightly confident in their long-term care (LTC) plans. And yet, the same survey notes that only a little more than a quarter (29%) have researched LTC options, and even fewer have worked with a financial professional on such plans (18%) or implemented an actual strategy (16%). Just as the meme says ironically … “This is fine. It’s all fine.”

What is behind this false confidence? Let’s dig a little deeper and find out.

Confidence is false when it is not based on reality — on sound reasoning or sufficient evidence. In this case, consumers haven’t taken the time and effort to actually create a plan, yet inexplicably they seem to be confident that they will be OK.

Perhaps their confidence is built upon an overreliance on unrealistic support. When asked how they expect to pay for long-term care if they get sick unexpectedly, 63% said personal savings, and 53% said Social Security or Medicare. Additionally, 79% of respondents expect either their partner or children to provide LTC care, should they need it. As financial representatives, we recognize that unless fully discussed and prepared for, these may not be viable choices.

Psychology Today cites that “… death anxiety drives people to adopt worldviews that protect their self-esteem, worthiness and sustainability.” The worry around death and potential end-of-life care could be the reason many consumers tell themselves everything is fine, or perhaps their reassurance may be an act of self-preservation. When pushed to define what “fine” looks like, however, they are missing key elements of their long-term plan — whether it’s talking to their financial professionals or buying long-term care insurance.

No one wants to think about death or the need for someone to take care of them. As financial representatives, we have a responsibility to talk to them about their long-term financial strategies, including end-of-life or long-term care. If we can position these topics as ways to provide more security for clients and their families, it might reduce the awkwardness of these conversations.

According to the U.S. Department of Health and Human Services, it is estimated that at least 70% of individuals over the age of 65 will require some long-term care services in their lives. While we recognize many of our consumers are confident they’ll be among the other 30%, it’s up to professionals to help prepare them for the times that they might be wrong.

“Whether we want to acknowledge it or not, research has proven that many of us will need to deal with a long-term care event — either for ourselves or for a loved one,” says Jeff Levin, vice president and head of Care Solutions at OneAmerica.

“We know that when it comes to long-term care, confidence does not equal preparation. Instead, having the necessary plan in place to be able to address potential costs associated with a long-term care event is critical in removing the burden for a family.”

The pandemic may seem over; yet, its impacts will continue to be felt on our finances — and our worldview — for years to come. LIMRA’s Fourth Quarter U.S. Retail Life Insurance Sales Survey indicated that total life insurance’s new annualized premium grew 20% in 2021, representing the highest annual growth since 1983. It’s true that the insurance industry saw an uptick in those interested in life insurance post-pandemic. So, one might assume that this would also trickle down to those seeking a long-term care (LTC) plan, including purchasing LTC insurance. In fact, the data gathered in a recent survey from OneAmerica® might surprise you.

Well under a quarter of consumers (15%) say the pandemic has been highly influential on their perceptions of their need for an LTC plan. The respected 2022 Milliman Long Term Care Insurance Survey noted that outside of Washington state, the number of new insureds in 2022 dropped 9.4% based on the insurers that reported sales.

Nevertheless, the pandemic has proven more influential on broader health-related perceptions. Nearly two-thirds agree that the pandemic has made them more aware of their health’s potential impact on their financial security (65%), that they are more worried about family members’ health and wellness (64%), and that they feel a greater need to prepare for the unexpected (63%).

The same survey illustrated that only a little more than a quarter (29%) of consumers have researched LTC options LTC planning, and even fewer have worked with a financial professional on such strategies (18%) or implemented an actual plan (16%). It seems COVID has made consumers more mindful of the problems that exist, but ultimately this awareness didn’t result in action that could relieve those concerns and help them prepare for the unexpected.

The delay in action could be due to recent market factors. Whatever the reason, it’s a great time to leverage this newly identified consciousness and concern as a starting point for conversation. We can lean into this interest in preparedness and help empower families as they create plans on how to pay for long-term care support — defined as help with some of the basic activities of daily living: bathing, dressing, eating and even using the restroom. There are many elements to a long-term care plan, but you can’t begin to address all the elements if they aren’t discussed.

“Helping families create a plan so they have the support they need isn’t just a responsibility — it’s an honor,” says Jeff Levin, vice president and head of Care Solutions at OneAmerica. “Our top sellers and distributors are genuinely caring individuals who take pride in being able to initiate compassionate conversations about long-term care needs.”

As we work to connect the dots for our clients, it’s important for all of us to recognize that individuals are more aware of their health’s potential impact on their financial security, their worry for their family’s health and their need to prepare for the unexpected. In part, because of the effect that COVID has had on our worldview and psyche, your customers are likely eager to learn how you can help them.. In fact, behind trusting their family (73%), consumers most likely will to turn to their financial services professionals (40%) — that’s you! — to have a conversation about their long-term care options.

When planning for the future, consumers tend to view matters through the lens of financial considerations. A recent study from OneAmerica® found that consumers place the highest importance on saving enough money for retirement (86%), eliminating debt (74%), and creating liquid emergency funds (68%). Long-term care (LTC) planning (48%) is the third-least important such action, reflecting the target audience’s relatively low prioritization of LTC. Only 17% see LTC planning as extremely important.

While each person’s situation is unique and each of these elements of financial planning is important, the sequence of planning could end up costing consumers. Sometimes it may be important to prioritize saving for LTC over (or in concert with) goals, such as eliminating debt and/or creating liquid emergency funds. Starting the conversation with clients about long-term care earlier can help them build a strategy over time, but it may also help them protect their insurability as they age. Only 22% of applicants aged 50 to 59 are denied long-term care coverage, while 44% of individuals aged 70 to 79 are rejected, according to the American Association for Long-Term Care Insurance.

Other times, however, consumers should be encouraged to examine if long-term care insurance, especially an asset-based LTC protection plan, is recommended. By waiting too long, there are risks taken that could impact the cost of coverage. If clients in their 30s, 40s and early 50s are focused on saving for retirement, they may miss out on the advantages of starting LTC planning in those years. Putting off the purchase of protection until their 60s or beyond can be costly, both in terms of premium dollars and the potential to become uninsurable.

“As financial representatives, we have the opportunity to help link individuals and families to care and then discuss options to help pay for that care,” says Jeff Levin, vice president and head of Care Solutions at OneAmerica.

“Helping families move closer to a holistic funding plan that truly supports all potential scenarios is the best approach. In my many years in the industry, it has been my honor to see LTC insurance provide support at a time when families need it most.”

How to integrate LTC insurance into your retirement strategy:

1. Starting early- A potential element of a long-term care plan could include an asset based long-term care protection policy, which is a life insurance-based product. Therefore, it stands that if you can apply early in your life when you are healthy, you might find a more affordable option.
2. Stacking strategy – Clients don’t have to purchase all their protection at once. Stacking creates LTC protection by purchasing multiple policies over time. This allows potential clients to benefit from lower premiums at earlier ages, lock in insurability and adjust when needs change so they can build up to their desired protection amount over time.
3. Understanding the full benefits of products- Policies these days come with a variety of riders and benefits you may not be aware of. Special white-glove services or payment options can be important benefits to review. These specialty benefits reduce the burden on families and allow caregivers the capacity to spend quality time with loved ones.

Financial representatives have the opportunity to help create a plan that will complement their overall retirement strategy — striking a balance that is comprehensive in nature to cover an unexpected need for care. Engage with your clients today to customize a plan that takes action at the right time.

Consumers’ impressions of traditional long-term care (LTC) protection are largely neutral or negative. In contrast, once explained, perceptions of asset-based LTC protection are more positive. Among the two types of insurance, asset-based long-term care is preferred by 66% of consumers, and 69% of them find it appealing to some degree.

Even more interesting, however, was the incredible response from consumers when they shared their thoughts about the most appealing features of asset-based LTC protection. Presented with a list of features, they were especially drawn to the idea that premiums don’t increase 94%, tax-free benefits 92%, unchanging benefits 90% and ability to pass unused amount to heirs at 84%.

Apparently, the perception of long-term care insurance, or really any insurance product, as purely sales-driven and untrustworthy continues to permeate the marketplace. What if, instead of fighting the stigma, however, financial representatives leaned into it? After all, there is admittedly a history of challenges that have plagued this product in the industry. While conceptually a great product, traditional LTC insurance has difficulty forecasting the future. Being transparent and honest about the challenges the product has received can help define expectations and explain the limitations of the product. It could still be a great choice for some customers.

It could also open the opportunity to discuss other products, such as asset-based long-term care protection and its positive features. When an individual purchases an asset-based LTC policy, they are essentially buying a policy based on life insurance and annuities. When an individual decides to apply for long-term care services, the insurer will segregate the assets in the policy and hold them until a claim is paid out. Instead of the death benefit being paid out to the beneficiary, the insured can tap into benefits from the policy to pay for long-term care if the need arises. If customers stay healthy, the entirety of the death benefit could be paid out to your beneficiaries after your death.

“OneAmerica was one of the first in the asset-based LTC product space,” says Jeff Levin, vice president and head of Care Solutions at OneAmerica.

“For decades we’ve paid out thousands of claims and have seen our products provide stable premiums, tax-free and unchanging benefits that are highly desirable. There is an appetite for these benefits that asset-based LTC protection can provide. By focusing on the benefits instead of ‘selling insurance,’ we can hopefully take away some of the stigma associated solely with insurance sales.”