Sales of long term care insurance must grow if there is any chance to keep federal programs like Medicare solvent and if baby boomers expect to receive quality long term care. A surge in sales has not manifested itself, meaning LTCI salespeople are competing amongst themselves for fewer prospects. But at least one industry expert sees a reason to celebrate in 2007.
Jesse Slome, executive director of the American Association for Long-Term Care Insurance, predicts LTCI sales will grow by 15 percent this year. He bases part of his prediction on the fact that the larger companies that account for most of the sales are growing the most.
Another part of the prediction is based on what he calls the “parrot effect.” Some 8 million Americans now own some form of LTC protection, and it is human nature for people to mimic the behavior of others. So as more policies are sold, more people are going to buy. Also, benefits paid in 2006 reached $3.3 billion, according to AALTCI data. As Slome says, that’s a lot of people receiving checks for their care and a lot of people talking about the checks they received to cover their care.
While those factors are part of the equation, Slome sees three other factors contributing mightily to increased sales:
- A federal awareness campaign: The Department of Health Services’ “Own Your Future” campaign will enter its third phase – mailing letters from the governors of major states to millions of households with residents between the ages of 45 and 65, encouraging people to consider LTCI.
- Simple products: The age at which consumers purchase LTCI has fallen by six years since 2000, to age 61. As that number continues to fall, more advisors are going to need to know about LTCI products, and carriers are doing their best to make the products easier to understand and better suited to address the needs of boomers.
- Market stability: Several significant insurers have entered or re-entered the market, bringing increased viability to the market as a whole. Also, stable or rising interest rates bode well for the industry. If rates remain where they are or go up even slightly, more insurers will be enticed into the market.
For more information on this topic and more, visit www.aaltci.org.