Beverly Hills, Calif.
It’s a question that many in the industry ask themsleves over and over. Namely, why isn’t long term care insurance growing faster?
A researcher and a consumer journalist offered some answers from their respective vantage points here at the Second Annual Intercompany LTCI Conference sponsored by the LTC Section of the Society of Actuaries.
The researcher, Matthew Greenwald, who heads Matthew Greenwald & Associates, characterized the background attitudes of consumers toward the LTC product as “a mix of ignorance, anxiety, wishful thinking and inability to plan.” But this is also coupled, he added, “with the recognition that LTCI offers some worthwhile benefits.”
To support his contention, Greenwald drew on findings from a number of surveys his firm has done since 1996.
Regarding ignorance, Greenwald quoted from a 1996 survey done for the National Council on Aging and John Hancock LTC, that showed Americans were wildly off-base in many instances when asked whether statements about LTC were true or false. In one such statement–Medicare is the primary funding source for most older persons’ long term care costs–73% of respondents said it is true when, in fact, it is false.
Similar misconceptions were held regarding the percentage of the LTC population under age 65 (it is nearly 40%) and whether the average length of stay in a nursing home was more than 4 years (it is not).
Anxiety revealed itself in the same survey in the percentages of respondents who said they were worried that they might need LTC some day (60%) and who said they were concerned about how to pay for LTC (69%).
Greenwald said these responses show there “should be receptivity to the product because there’s so much anxiety about LTC.”
The same survey also showed that little planning has been done for LTC. While 41% of respondents said they had done “some” planning, Greenwald said he wondered what “some” means in this case. Of the 11% who said they had done “a great deal” of planning, he said this “probably means they have done something constructive.”
A SOA Retirement Risk survey due to be released this month shows how deeply in denial many people are about the possibility of needing LTC. When respondents were asked about the likelihood of an average 65-year-old and themselves spending some time in a nursing home before death, retirees said this was “somewhat likely” for 46% of others as opposed to only 30% for themselves. Workers said 51% for others compared to 32% for themselves.
Greenwald said his firm asked producers and marketers the top reasons that consumers do not buy LTC when meeting with financial advisors and got such answers as sticker shock and confusion over tax treatment (see chart).