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Life Health > Long-Term Care Planning

Does LTCI make sense for your client?

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November is Long-Term Care Awareness month, and when thinking about long-term care insurance, where does it fall on most consumers’ “must-have” list?

According to an article by Christine Benz on the Morningstar website, it’s estimated that 7 million to 9 million U.S. residents had private long-term care insurance in 2010. It sounds like a lot, but not when you consider that 12 million Americans are expected to need long-term care in 2020. Or when you consider that there is a close to 70 percent probability that someone over 65 will become either cognitively impaired or unable to complete at least two activities of daily living, necessitating the services of a caregiver. That care doesn’t come cheap. The Genworth 2012 Cost of Care Survey puts the 2012 median annual rate for a private nursing home room at $81,030.

But despite the cost of long-term care being a top financial concern for most consumers (according to the LIMRA 2012 Insurance Barometer Study), less than 2 percent of consumers have LTCI policies currently in force.

While there is no debate as to whether some form of long-term care is in most people’s future, producers need to identify those market segments that can afford to pay the premiums, since cost rather than lack of information may be the deciding factor. From an income standpoint, 22 percent of those in the $100,000-plus income bracket own LTCI, compared to only 15 percent of those making $50,000 to $99,999. That’s not surprising when you consider the average annual cost of LTCI can range from $1,831 to $3,421 (depending on the age of the insured when purchased).

There is also a connection between ownership of LTCI and marital status as well as ownership of other types of insurance. According to the LIMRA study, consumers with life insurance are significantly more likely to own long-term care insurance, while those who have been married or in a partnership-type relationship are also more likely to have LTCI.

By analyzing the various aspects of their target market’s situation, producers can then provide the relevant group with information about LTCI. LIFE has a variety of tools to help with this process, from LIFE’s What You Need to Know about Long-Term Care brochure to its long-term care realLIFEstories videos.

By conducting an evaluation of the resources available if a need for long-term care arises as well as the client’s current financial situation, producers can help their clients decide whether LTCI is an option they should be considering as part of their long-term financial planning strategy.

For more from Marvin Feldman, see:

Selling to the Middle Market — What to Keep in Mind

5 External Trends That Will Affect Us

A New Norm


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