Better Addressing the Boomers through Annuities and Life Insurance

It’s probably safe to say that the over-riding financial priority for everyone in this group is — or should be — funding retirement, said Jesse Slome, executive director of the American Association for Long Term Care Insurance.

“And as the last decade has demonstrated, it’s likely that, in retirement, there will be several times when (Boomers) could face significant, unexpected, and potentially devastating financial setbacks because, in part, people are living longer, precipitating the potential for ‘black swans’ or unexpected events with dire consequences,” Slome explains. If current trends continue, many will live to their late 80s and into their 90s, he noted; consequently, it’s not “too alarmist to say that the potential to have one’s retirement finances upset is high at a time when the retirees will be in no position to deal with it.”

A new study by the Center for Retirement Research at Boston College points to a potential crisis as Americans struggle to meet health care costs. In over 300,000 simulations conducted by the Center for Retirement Research, the average lifetime health care expenditure for a typical married couple at the age of 65 is $197,000. This figure covers insurance premiums, out-of-pocket costs and home health costs. But when nursing home costs are included in the equation, that amount jumps to $260,000, with a 5 percent risk of exceeding $570,000.

“After a period of consuming a lot and not effectively planning for the future, Boomers are waking up to the fact that they have needs both for retirement and for the protection of their family’s financial lives. It’s eye opening,” said Clark Troy, research director for the Aite Group, a research and advisory firm in Boston. Fundamentally, the anxieties stemming from those shortcomings bode well for the industry, he noted.

Newer Approaches

Perhaps, but Slome believes that many agents are relying more on their relatively dated training and are largely overlooking newer products and approaches, which could be crimping their effectiveness. “They say consumers aren’t interested in buying long-term care insurance, but that couldn’t be farther from the truth.” In fact, even with a difficult economy, sales continue to rise, he pointed out.

Slome also said that agents should keep in mind that consumers — including Boomers — are increasingly investigating LTC insurance options online, perusing sites such as their LinkedIn page. “Your online presence today is your calling card.”

According to a Pew Research Center study conducted last year, 76 percent of older Boomers (those aged 56-64) and 81 percent of younger Boomers (those aged 46-55) have experience using the Internet. In total, Boomers make up 33 percent of the total Internet using population. And finding health-related information is one of their prime reasons for going online.

However, Smart said comparison shopping for life insurance choices on the Internet is extremely difficult. “You (basically) can do comparison shopping on term products, but because life insurance and long-term care insurance are fully underwritten products, you really can’t comparison shop. You don’t know what kind of rating you’re going to get from any insurance company.”

Ultimately, he believes agents must work to overcome the reputation of life insurance in the eyes of many consumers, which has gotten “something of a bad rap.” That can be achieved through strategies like training and helping agents with more interactive marketing materials as well as a better understanding of technology, said Smart. «

Chuck Green is an Atlanta-based freelance writer who specializes in business topics.