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January 20, 2002 at 07:00 PM
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Those who are actively marketing long term care insurance believe the LTC market is headed for moderate to strong growth.
That finding came from two recent studiesby Health Insurance Association of America and LIMRA International.
Why? Although the studies pointed to five different reasons, “need” was the underlying assumption. That is, consumer need will drive this market in the years to come.
Therein lies the problem. The need for LTC insurance now and in the future has never been greater. Historically, however, consumers have been reluctant to purchase the coverage. Is this reluctance simply a matter of lack of awareness and education about LTC, or is it something else altogether? And will need alone spur sales in the future?
To get some answers, it is helpful to understand how consumers view LTC itself as well as LTC insurance issues.
Consumers tend to be quite realistic in their assessment of both their risk of someday needing nursing home or LTC and the financial ramifications such care would entail. The possibility is all too real for people, and they know it.
Even so, many consumers choose to ignore the issues surrounding LTC. Some prefer to bury their heads and hope it will never happen to them. Others either underestimate or do not understand the need for LTC protection.
The reality of todays demographics–the increase in non-traditional families, family members living further apart, and adult children unable or unwilling to provide the care once taken for granted–has not yet hit home with these individuals.
In addition, many consumers have a false set of beliefs when it comes to LTC costs and funding (AARP, “The Costs of Long Term Care: Public Perceptions Versus Reality,” December 2001).
Thus, the difficulty the LTC insurance industry faces is not so much with the product, but in overcoming the denial for the need for LTC insurance.
Most individuals involved in the market agree that one of the barriers to growth has been a lack of consumer knowledge about the product, its features and benefits. Producers report that, because of lack of exposure, knowledge of LTC insurance is very basic–many consumers still think of it as nursing home insurance.
Many consumers are unaware, or only have a vague understanding, that LTC can be provided in an assisted care facility, adult day care center, or at home, and that the care need not be provided by a licensed professional.
Producers Talk About LTC
Source: Producer Focus Groups conducted for LIMRA International, Windsor, Conn. |
To date, emphasis has been lacking on home health care features and the ability of individuals to stay independent. Historically, much of the discussion has centered on institutionalized care. Further, many consumers do not understand the services they are purchasing or can purchase.
Another popular misconception is that people tend to overestimate the true cost of LTC insurance. In some cases, consumers grossly overestimated the cost of premiums.
In a recent set of LIMRA focus groups, for example, consumers were presented with a typical, basic policy for a 60-year-old and asked how much they thought this policy would cost. More often than not, participants estimated five to 10 times a policys actual cost.
