By

Carriers and producers alike have seen a marked improvement in consumer awareness regarding long term care insurance in recent years. This, plus demographics, tops the list of reasons why the LTC insurance industry remains optimistic about the products future.

But, while more Americans than ever appear primed for buying LTC insurance, the industry must be careful not to get ahead of itself. Marketing and field professionals must go back to basics, especially when it comes to understanding the economic value of LTC coverage. For many, the ultimate buy decision comes down to just that—economics.

A 2003 survey of more than 1,100 Americans who shopped for LTC insurance, conducted by LIMRA International, indicates that individuals who buy the insurance do so for very personal reasons.

For example, when asked to choose the 3 most appealing features of LTC insurance, these active shoppers did not necessarily answer coverage for nursing home, home health or assisted living care.

In fact, just over half the shoppers identified coverage for care received in a nursing home as an appealing feature.

What about the other 50%? It appears shoppers are honing in on specific features for very personal reasons. There is evidence that some have a succinct plan in mind about what type of care they prefer.

Nearly half the shoppers said either nursing home coverage or home health care coverage was appealing but not both. This explains much of the discrepancy.

For example, a third who indicated that home health care coverage is a top feature did not also say nursing home coverage. These individuals expressed less concern over needing nursing home care someday and may not foresee it in their future at all.

Home health care, then, is the feature that resonates with them. In addition, a number of shoppers, albeit small, find other features such as shared care, lump-sum payouts, restoration of benefits, hospice care, and caregiver training as more appealing than one or more of the core benefits.

Such results may lead one to ask, how is it that the LTC insurance industry is not getting across a clear message about the products core coverages 100% of the time?

One may also wonder if, to some degree, the industrys competitive nature, along with the fact that insurers are vying for the attention of a small pool of motivated shoppers, is clouding the true message. (Note: Just over 6% of Americans shopped for LTC insurance in the previous 24 months.) As a result, some providers may rely on certain value-added feature to encourage purchases.

In reacting to the research finding, one insurance executive asked: “Are consumers really shopping around for a policy that will put ramps in their home?”

No doubt there are Americans who walked away from their LTC insurance shopping experience with the view that home modification is one of the products most appealing features. But this opinion is not necessarily a result of an overload of messages. If anything, it may be a reflection of personal experience that made a non-core feature be the one that hits home.

Such personalization says a lot about how far the product has evolved. However, the industry should take care not to trip over its own fervor. Too much information can dilute the true message. The reality remains that an overwhelming majority of consumers are not yet convinced of the products economic value.

Similarly, 9 out of 10 shoppers deem “price” as a deciding factor in choosing one carrier over another.

While niche marketing and value-added features have allure for some, they frustrate many. Nearly half of non-buyers admitted having difficulty deciding what type of policy to buy, and a third were afraid of making a bad decision due to the products complexity.

Such complexity is exacerbated by the fact that most shoppers comparison-shopped before purchasing their policy, and no 2 insurers offer exactly the same policy, features or price. So, for a minority of consumers who already are sold on the products value, decisions may come down to specific product features that resonate with the individual.

More often than not, LTC insurance marketers have little time to convince an American that a very complex and little-understood product is for them. The survey indicates that consumers tend to make their purchase decision within 6 months of shopping.

Actual buyers were likely to be even more decisive, many shopping for just 2 months or less. Yet, a good portion of non-buyers made a swift decision in that time frame as well. These folks decided outright that the product was not for them, with a majority pointing, once again, to “price” as the driver that could have changed their minds.

The good news is that Americans are notably concerned about LTC. What they arent convinced of is that buying a relatively new and “expensive” insurance product is the prudent path to take.

Economics is why they are not buying LTC insurance when it should be why they are buying.

Once the simple message–that LTC insurance is the most economical way to pay for LTC–penetrates the national consciousness, a more impressive number of LTC insurance shoppers will look for sound products. They will do this to take the financial scare out of LTC.

is an analyst in long term care research for LIMRA International, Windsor, Conn. She can be e-mailed at jdouglas@limra.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.