In Medicare, Allstate Finds

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Baby boomers are largely pessimistic about the chances the federal government will make the changes needed in the Medicare program to provide them with adequate health care after they retire, a new study by Allstate finds.

Allstate found that 65% of boomers disagree with the statement that the federal government will make necessary changes in Medicare to ensure their health care needs in retirement are met.

Generation-Xers in the survey registered similar pessimism, with 67% disagreeing with the statement.

Agents and brokers selling long term care insurance policies might wonder when all that uncertainty is going to lead to more sales.

Linda Clark, who heads Secure Life Strategies, Hinsdale, Ill., is among them.

“You still find people who just dont think its going to happen to them,” says Clark. “The nursing home is what happens to someone else, not them. Unfortunately, when they get older, theyll find they can experience it, too.”

Clark believes an essential part of the job of LTCI producers is to educate boomer clients to a harsh reality: They alone will be responsible for providing for most of any extended care needed for themselves and/or their spouses after they retire.

A lot of people have seen a parent wipe out assets to provide for a health emergency. These are the people who are more likely to buy, she notes, but most people still think that kind of crisis is still a long way off.

“Producers must start impressing on the client that the government is definitely not going to pay, and the younger the client is when you start giving them that message, the better,” Clark says. “Keep showing them the statistics about how many people need long term care when they get older and how expensive it is. Education is the key.”

Other aspects of the Allstate survey suggest many boomers and Gen-Xers may be increasingly receptive to discussing LTC insurance with their agents.

Allstate found 41% of boomers and 47% of Gen-Xers said they will likely work after retirement because they will need the health benefits.

In a similar survey Allstate took just a year ago, just 29% of both generations said that.

On another question in the more recent survey, 64% of boomers said rising health care costs are a major concern they have about retirement. That was up from only 39% when the survey began in 2001. And 50% said they worry about getting sick, compared with only 27% in 2001.

“The significant gap between what people believe and how they are acting is troubling, because it suggests that too many Americans plan to retire and just hope for the best,” says Casey Sylla, president, Allstate Financial. “Hope is not a substitute for having a well-thought-out plan for retirement and sticking to it.”


Reproduced from National Underwriter Edition, December 16, 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.