Help in penetrating the LTCI market

“More consumers are purchasing limited duration policies as a way to keep the cost of long-term care insurance affordable,” he says. “In 2009, almost one-third of individual buyers purchased a 3-year benefit period. Is that sufficient coverage or will they ultimately run out of benefit dollars? Typically, it was enough coverage, and it was much cheaper than lifetime of unlimited coverage.”

Slome notes a policy designed to pay benefits for three-years costs between 42-and 54 percent less than a policy that will pay claims for an unlimited number of years. The study found that one in 10 of three-year policies actually paid benefits beyond the 36-month time period and only 8 percent actually exhausted their policy benefits.

“The problem with the information we receive from the government is that it includes information on individuals that are extremely unlikely to purchase LTCI coverage,” Slome adds. “With the study we’ve conducted, we were able to only look at buyers and projected buyers from a pricing standpoint, so it’s much more relevant information for the advisor’s target markets. In order for advisors to be successful, especially with baby boomers, they need to realize the limited funds the demographic has, and tailor policies accordingly.”