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October 27, 2002 at 07:00 PM
If youre selling long-term care insurance protection, youll find this statistic, courtesy of the U.S. Census Bureau, relevant to your prospecting: Every second, an American turns 65.
If you are in the senior market, you already know that most mature-aged adults do not currently have private insurance to address the LTC funding problem. However, I believe that will change as large numbers of adults move into the “silver” and then the “golden” years.
More aggressive marketing on TV and in print is already raising awareness about the issue among aging baby boomers and their parents. As the so-called sandwich boomers try to juggle careers, children, and care for aging parents, they are getting a front row view of the critical importance of LTC insurance.
The sheer number of older Americans–there are more than 40 million aged 50 and 64, and 35 million aged 65 and up–suggests there is potential for expanding sales of private LTC insurance. However, identifying the right prospects is critical. This requires LTC buyer profiling.
Before looking at the buyer profile, lets review the two major types of private insurance that can address the problem. One is stand-alone LTC insurance; it owns the lions share of the market right now. The other is linked benefits policies–those that combine life insurance with LTC benefits in one policy. The latter are attractive to the segment of the market that can afford to buy stand-alone policies but do not do so.
Regardless of the policy type purchased, LTC buyers do share certain characteristics when compared to non-buyers. Their profile follows:
The LTC buyers are more likely to be married, more highly educated, and wealthier. They typically have incomes greater than $50,000 (linked benefits owners, $100,000) and assets, excluding the primary residence and qualified plans, greater than $100,000 (linked benefits owners, $300,000).
Having an average age of 67, LTC insurance buyers have planned well over the years, and they recognize that government wont pay their LTC expenses unless they deplete their assets. They dont want those hard-earned assets diminished by LTC expenses. They see value in shifting the risk to an insurance company.
Furthermore, these individuals are healthy and active, and they dont see themselves as elderly. (Therefore, it is critical for advisors to present LTC insurance as a “financial planning” tool. This combats the perception that the coverage is “old peoples” insurance.)
