Help Lower The Average LTC Age: Offer LTC Riders
Though the average issue age for long-term care products is coming down, industry data suggests they are still heavily concentrated around retirement ages.
This begs the question: Why dont younger people buy LTC insurance, especially when theyre in better physical and cognitive health and when costs are significantly lower? And what can be done to change the situation?
Lets look at some numbers. Younger age groups spend money for other purposes. For example, in 1999, according to the Bureau of Labor Statistics, those aged 35-44 and 45-54 spent about two-thirds of after-tax income on food, housing, alcohol, clothing, transportation, entertainment and personal care products and services.
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The 35-44 group spent about 9% for personal insurance and pensions including Social Security and the 45-54 group, about 10%. Health care spending represented only 3.3% for the 35-44 group and 4% for the 45-54 group. By contrast, for those age 65+, health care spending was almost double the 35-44 group averages.
Further, Americans are spending a lot. Consider:
–The average household credit card balance was $7,000, and the average household has 10 cards, according to the July 5, 2000 Wall Street Journal.
–Household debt service payments in 2000 reportedly exceeded 14% of disposable personal income.
–Catastrophic medical events are a leading cause of home foreclosures.
Debt is big time! For many families, assets and income may be insufficient to absorb most major catastrophic medical events. With consumption and debt so high, people need protection against relatively low-risk, but devastatingly high-cost, catastrophic events.
Many protect against the death of a family provider by purchasing life insurance. But what happens if that person becomes chronically ill, say from stroke or debilitating heart attack? Many producers dont yet realize that, for a relatively modest incremental cost, clients can protect against that very riskby buying a LTC acceleration rider for their life policy.