It’s time to borrow a great line from Mark Twain, “The rumors of my death are greatly exaggerated’ and apply them to long-term care insurance (LTCI).
Truly, without an understanding of what really is taking place, one could make the case that the industry is taking in its last breaths. Witness the recent Senate hearings and the resulting media coverage and one could leave with an impression that insurers are not committed and that failing a national long-term care insurance program, we’ll soon have streets cluttered with aging seniors.
Insurers are committed, but not in the way many people have been conditioned to believe. They get the fact that an aging population faces a looming long-term care crisis. Insurance agents optimistically believe (or have been trained to believe) that every one of the members of this population represents a viable prospect. Insurers have no reason to dampen that enthusiasm, but they know the market for their product is defined and by definition limited.
Long-term care is a universal issue facing all Americans – and if you expect to reach past your late 70s, it’s one very likely to touch you and your family. But, long-term care insurance is NOT the universal solution. Never has been. Never will be.
The rumors of the industry’s imminent death are a direct result of the expectation that LTC insurance is for everyone. And, when everyone can’t afford it … or can’t health qualify for it … or makes a decision not to buy it … then something is afoul.
Insurers are committed – to offering a product to those who can and choose to afford protection. Equally important, to those who can health qualify.
That’s not every American. That’s 8 million Americans who own the protection and some 500,000 who buy coverage on an individual basis or through their employer.
Long-term care insurance is now a roughly $11 billion annual industry. Long-term care insurers paid out roughly $6.6 billion in claims last year according to the most recent American Association for Long-Term Care Insurance research.
An $11 billion industry is far from dying. Those rumors are greatly exaggerated by those who have ulterior motives or simply a lack of understanding. It’s up to us to set that record straight.