Since we are the generation who followed the enormous “Baby Boom”, we are sometimes known by the ignoble name, the “Baby Bust”. If you grab your calculator you’ll find that the oldest of us are about to turn 50, while the youngest are yet in our 30.
From a demographic standpoint, it’s easy to remember our numbers: there are about 50 million of us and we’re equally composed of males and females (50/50). By the year 2030 we’ll be right in the wheelhouse for long-term care insurance sales, hitting the age band 54 through 65, at which point we’ll comprise 13 percent of the American population. Geographically speaking, we make up 13 to 18 percent of every state in the nation.
I’m not only the president, I’m also a client
Hailing from this era, I can speak with some credibility. The label “Gen-X” was a testament to our ineffable lack of identity. No one could pin us down, but we were okay with that. We were more ethnically diverse than generations before us (60 percent non-Hispanic White, 19 percent Hispanic, 12 percent non-Hispanic Black alone, 8 percent non-Hispanic Asian alone, 2 percent all other races). This diversity translated into increasing tolerance and acceptance, according to Dr. Rick Hicks and Kathy Hicks and their book Boomers, Xers and Other Strangers: Understanding the Generation Differences that Divide Us.
This general sense of amorphism and uncertainty pervaded other aspects of the Gen-X demographic. Divorce rates continued to increase, more of our mothers worked outside the home, and more worksites were either “downsizing” (there’s a term that previously didn’t exist) or laying off their employees. Sociologists believe Gen-X countered these trends by placing increased emphasis on personal life and family, and less on work or finances. Furthermore, family became whatever we defined it to be. (About two-thirds of us are married, about 10 percent divorced, and 15 to 20 percent never married.)
Our savvy generation was the first to develop democratizing technologies, including Google, Amazon and YouTube. Yet our approach to the workplace was in stark contrast to those who came before us: we were neither wedded to our employers, nor determined to die at work. One side effect of the Baby Boomers’ tendency to delay retirement has been to nudge their Gen-X co-workers into more ambitious plans for promotion.
Among the fields where we tend to find most Gen-Xers are “management” and “professional”, followed by “service”, then sales and office positions (although, in all fairness, there’s a huge demand for these kinds of positions across most of the country). These categories account for 90 percent of women and two-thirds of men. Our generation is generally well-schooled, consisting of about 90 percent high-school graduates or having attended some college, with one-third having an undergraduate-level degree or greater.
When the oldest among us was born in 1965, life expectancy at birth was 70.2 years. By the end of the generation in 1976, our life expectancy had risen to 72.9 years. Perhaps owing to our relatively white-collar and non-disabling occupations, longevity among our cohort has risen yet again. By 2006, a Gen-X male could expect to live to approximately age 78, while a female could look forward to attaining age 82.
Getting to know Gen X: “Sixteen Candles” plus a few dozen more
Names of famous Gen-Xers serve as both cultural milestones and as imaginary prospects. Could you envision yourself sitting across the table from the following individuals and pitching long-term care insurance? (Let’s leave aside the fact that they are assuredly mega-wealthy.)
- Adam Sandler
- Molly Ringwald
- Tony Hawk
- Will Smith
- Ken Griffey, Jr.
- Matt Damon
- Lance Armstrong
- Carson Daly
- Alanis Morissette
- Tiger Woods
- Reese Witherspoon
Getting to know Gen X: their backstory
When you’re in sales, it’s important to know what shapes an individual. What’s his or her backstory? In the case of those born between the years 1965 and1984, we all share certain national historic events in common. These occurred during our formative years and served as the crucible in which our identities were formed for later life.
Without naming everything that occurred, allow me to list a few major events that should ring familiar:
- Occupation of the U.S. Embassy in Iran and the ensuing 444 day hostage crisis
- Time magazine named its “man” of the year: the computer
- Martin Luther King, Jr. Day became law in the United States
- MTV debuted
- Mobile phones and the Sony Walkman debuted
- Sally Ride became the first American woman in space as well as the youngest American in space
- Three Mile Island nuclear power plant accident in Pennsylvania
- AIDS identified
- CNN launched
- Apple Mac goes on sale
- Highjacking of the cruise ship Achille Lauro
- Explosion and loss of the crew of the space shuttle Challenger
- Destruction of Pan Am flight 103 terrorist bomb over Lockerbie, Scotland
- Fall of the Berlin Wall
Getting to know Gen X: pragmatists when it comes to financial decision-making
As a whole, Gen-Xers have been described as “independent”, “resilient”, “adaptable”, “cautious” and “skeptical”. This is a resourceful group, and one of their most important financial goals is home ownership. Thankfully, the majority already do own their homes (among 40 to 44 year olds – nearly 84 percent of married couples, as well as 47 percent of males living alone, and 50 percent of females living alone, own their homes).
Gen-X’s poverty rate is below the national average. In fact, both mean and median incomes suggest this may be a cohort who could benefit from researching long-term care insurance. Among ages 40 to 44, the mean income of married couple families was about $105,000, while the median income was just over $84,000 (figures from 2008). Because Gen-Xers have no desire to forfeit their standard of living, they are pragmatists when it comes to financial decision-making. They acknowledge the need to take rational steps to save or invest as well as being willing to educate themselves or employ the services of a trusted professional.
Getting to know Gen X: Don’t do today what you can put off until tomorrow
Knowing what we know, how do we “crack the code” and sell long-term care insurance to this generation — those Americans roughly between the ages of 30 and 50? First, it’s no easy task for any number of reasons.
When I started keeping detailed statistics on behalf of my agency (LTCA), the age of our average buyer was 71. Reflecting a widely-known trend, our buyer’s average age today is now 59, right in line with the industry (although a little on the high side). Although we are dealing with average, the attentive reader will still note that 59 is still a decade older than the subject of this article. However, the total number of all Gen-X applicants last year (aged 30 through 50) comprised less than 10 percent of our total.
The numbers back up an observation we’ve previously made as marketers: as a rule-of-thumb, prospects between the ages of 40 to 54 demonstrate an eagerness to learn about long-term care insurance and will request information and return cards all day long. But they are rarely “buyers.” It’s not until the ages of 55 to 64 that individuals reach that part of the “nurturing” process where they are ready to buy.
Don’t believe me? One of our carrier partners conducted research about the long-term care insurance buying process and found a lag time from awareness to purchase that can last as long as seven years, according to the Genworth LTCI Purchaser Study Summary of 2013. This precisely describes the ground we are covering today:
- The average age at which one becomes aware of the need for LTC is 44
- The average age at which one becomes aware of the existence of LTC insurance is 46
- The average age at which one engages in learning about LTC insurance is 50
- The average age at which one actually purchases LTC insurance is 53
One of my respected colleagues wrote a white paper recently wherein he describes working with a body of clients who consider themselves “too young for long-term care insurance” – later using a 50-year-old as an example. According to research published by the College for Financial Planning, the top four financial planning issues of clients are:
- Health care costs
- Funding retirement
- The burden of taxes
- Investment growth.
Ranking second to last is funding long-term care. Yet, as my colleague correctly articulates — no financial planner worth his or her salt can rightly separate retirement planning from long-term care planning. So what we have is a knowledge gap.
One can’t necessarily blame the public. After all, we only know what we’re told. And what we’ve been told for the last decade — relentlessly so — by the popular financial media is when to buy:
- “Wait until you are near 60”
- “Mid 50’s”
- “For many people younger than 50, long-term care insurance seems like something to defer…they don’t have the fear of reality until they’re over 55.”
But is this advice the chicken or the egg? Are advisors merely reporting who is coming into their office and buying, or is this the consensus recommendation?
After all, if we believe that the best time to apply for long-term care insurance is when you are young and healthy, then why wait until you are in your late 50s? Why is the average age still 59? Shouldn’t we be spreading the word to Gen-X that no one is either too young or too healthy to start looking at long-term care insurance? Why not a 40-year old or 30-year old?
Getting to know Gen X: They’re pushing the envelope
From a carrier standpoint, there comes a point of diminishing returns – risks versus rewards, if you will. Back in the salad days, it was normal to underwrite between the ages of 18 through 89. As the ceiling started to cave in, the older ages fell to 84…then 79… and now as low as 75 with some companies. But while some might have seen that coming, something even more interesting was what happened on the younger end: the bottom rose to meet it, with the minimum age often set at 40.
This was a response we’ve grown accustomed to in long-term care: even though a minority of sales may come from a certain group, the risk associated was too high. And when it came to 20-somethings and 30-somethings, the kinds of claims they are prone to are the most catastrophic of all. Imagine a healthy and athletic kid diving into a pool and paralyzing himself from the neck down (or suffering the same fate from hang gliding, motocross, etc.). Or consider the type of diseases like which tend to manifest during these years, such as Lupus or multiple sclerosis. Now imagine paying these claims not just for the last few years of someone’s life, but for the next 40 years.
So even as the carriers are working to mitigate risk by narrowing the age band which they will accept, is there any reason why I, as an advisor, would not recommend a Gen-Xer look at long-term care insurance for himself or herself? Are ages 30 through 50 too young? Why is everyone else recommending waiting until ages 55 through 60? Here are possible reasons why someone might wait:
- Budget: Competing financial priorities
- Postponement: Currently uninsurable but hoping to be insurable in the future
- Future expectations: Expecting or hoping to be married in the future and waiting for the benefit of a couples’ discount. (Some carriers let you buy today, then add this later; but you’re playing with fire since there’s no guarantee they will uphold this promise. When they change policy forms, they sometimes change their procedures as well, and then new rules take precedent.)
- Flexibility: Concerned about possible inflexibility of policy with a purchase this far in advance
Addressing this last point, policies as far back as even a decade ago began including increasingly broad “Alternate Plan of Care” language in an attempt to mitigate concerns over policy obsolescence. Brochures used examples of robotics and telemedicine and promised to consider future technologies even if they weren’t explicitly named by the contract. Today’s policies include even more options for the policyholder to upgrade his or her contract in the future rather than risk replacement.
For what it’s worth, younger consumers might have also added to this list concerns over paying for coverage so far in advance or the risk of the company’s solvency so far in the future. But since this is an article for fellow producers — and not the lay public — we needn’t retread LTC 101 here.
From a financial planning standpoint, this would be a great national goal for Long-Term Care Awareness Month, by the way: let’s see to it that Gen-X gets it into their collective psyche that buying LTC insurance is just something you do in your 50s. It needs to become an inculcated, expected part of growing up and becoming an adult. You buy life insurance in your thirties; disability income insurance in your forties, long-term care insurance in your 50s, and Medicare Supplement comes at age 65. (Your mileage may vary.)
Having drawn a circle around Generation X and colored it in with facts and figures, let’s now turn our attention to the ways in which we might penetrate this reluctant market and demonstrate the value of long-term care insurance.