What My Survey Revealed About LTC Market Trends Today
I was asked to give a speech this year on long-term care insurance market trends. To really prepare myself, I decided to survey my 6,000+ e-mail database. I wanted to know the benefit and premium characteristics of what was being sold, and I wanted to know attitudes conveyed by consumers and agents.
The respondents to my survey averaged two apps per week, with 62% selling at least one per week, so my survey attracted “serious” LTCI agents.
For purposes of reasonableness, I matched the benefit and premium characteristics of my respondents against the Health Insurance Association of Americas “Who Buys Long-Term Care Insurance in 2000?” The comparison showed my results, based on policies sold two years later, to be reasonable with two major exceptions–inflation coverage and average age.
For example, my survey showed $130 average daily benefit, five-year average benefit period, average age of 59.6 years, average premium of $2,175, and 80% sold with compound inflation.
The HIAA survey based on policies sold two years earlier showed $110 average daily benefit ($120 for $50,000+ incomes, five-year average benefit period, average age 66 years, average premium $1,741 ($1,860 for $50,000+ incomes), and 41% sold with inflation of any kind (compound, simple or future purchase offers).
My survey has an inherent bias, which partially explains the wide differences between average age and the number of policies sold with compound inflation. I train heavily on the importance of compound inflation and selling to younger people and because compound inflation can double the premium at younger ages, it is logical that the sales results in my 2002 survey reflect a higher average premium even with a younger average age. Also, the HIAA study doesnt look at buyers or people surveyed from the general population younger than 55, so that would make the HIAA average age older.
I am convinced that for long-term care insurance to work, we must sell younger people. I was glad to see that 21% of respondents stated they are participating in worksite marketing as the HIAA surveys have told us for years that the average age there is 43. I believe that anyone over age 18 is not too young to think about long-term care insurance.
Here are some examples of why I believe this. The manager of the studio that my company used to make the employee education video for the federal LTCI program has a 22-year-old son who is paralyzed from the shoulders down from an automobile accident earlier this year. Who is taking care of him? His mother, mainly. Would she be thrilled if he had long-term care insurance? I think so, as it would greatly increase the hours of sleep she gets in a 24-hour period.
Or what about the couple we filmed in East Tennessee? At age 25, the husband was on his way home from his engineering job on a motorcycle and a dump truck pulled out in front of him. He sustained a head injury that caused his 23-year-old wife to lose her job and have to help him with all of his bodily functions over the next three years. Her synopsis of the situation still rings in my ears: “I guess you couldnt have enough insurance for something like this.”