Purchasing long term care insurance would seem to be a basic strategy to guard against longevity risk. But LTCI continues to struggle with market penetration. Despite statistics that point to 30 or 40 years in retirement – whose cost could devastate an estate and legacy plan – too many advisors still encourage clients to self-fund. Is this really in the best interest of boomer clients? We went directly to the source, and asked Keith Hartstein, SVP of John Hancock Financial Services and CEO of John Hancock Funds about the need for LTCI in the comprehensive boomer financial plan. John Hancock has $1.4 billion in inforce premium and more that one million policyholders as of May 31, 2007. They started selling LTCI in 1987.

Boomer Watch: Traditionally, market penetration rates among boomer clients have been low. Most advisors say the benefits are not worth the cost. But are you seeing this attitude start to change now that more boomers are closing in on retirement age?

Keith Hartstein: It’s still yet to be determined. The need in the boomer demographic is still underestimated. It’s the type of product that you don’t realize you need it until you need it, and by then it’s too late. But it’s really the personal stories that sell the product. Once someone has had to deal with this issue on a personal level (meaning a loved one whose needed long term care), they understand the need and convey it to others. In a room full of people, when we ask about loved ones that have spent time in a nursing home, more hands are going up.

BW: It seems like Genworth and John Hancock are the two companies that have succeeded in this space. And it’s not a loss leader; you’re making money at it. Why have you succeeded where so many others have failed?

KH: Commitment. Most of our policyholders are buying this when they’re in their 50s. If they don’t use it until they’re in they’re 80s, they better be sure the company is going to be around [Ed note: A number of large insurance carriers have recently left the LTCI business].

BW: How are you specifically reaching out to the boomer demographic?

KH: We haven’t specifically said that this is for boomers, but if you watch our advertising, it’s obvious these are boomer issues. One has a guy with his parents gardening in the background, and he’s talking about how LTCI allowed them to do what they wanted without pressuring him. Overall, we’re talking not about LTC insurance, specifically, but how John Hancock can address the client’s comprehensive financial plan.