The standalone long-term care insurance market is suffering, and according to the Society of Actuaries, individual policy sales have been declining since 2003. However, the increase in hybrid plan and long-term care rider sales may actually have more seniors covered than ever before.
“I actually believe more people are covered now, not fewer,” said Steve Schwartz, president of HUB International Northeast’s executive benefits division. “Maybe 75 percent of the cash value policies we’re selling include a long-term care rider.” In fact, now that many companies are adding chronic care riders to their term life insurance plans, says Schwartz, hybrid policies are more available than ever.
The drop in standalone sales is likely due to a combination of rising premiums and declining perceptions of value among advisers and their clients. “Long-term care wasn’t priced correctly when it came on the scene about 30 years ago,” said John Bucsek, MetLife Solutions Group managing director. “The industry eventually had to re-price even existing contracts, and that spooked both advisers and clients.”
Despite the poor state of the standalone market, the availability of hybrid plans and widespread recognition of the need for long-term care are encouraging more Americans to cover themselves. “I think a large segment of the population certainly sees they’ll need some form of long-term care,” said Dave Beck, partner at Egan, Berge and Weiner, LLC. “It’s a growing number of people, and the reality is setting in that as life expectancy continues to soar, you’ll likely become a burden if you’re not covered.”
The need for long-term care is particularly common among Baby Boomers, who are currently turning 65 at a rate of roughly 8,000 per day according to the AARP. However, 50 to 55 is a better range for most pre-retirees to purchase a policy or tack on a rider. “At that point it becomes pretty economically feasible for most, but if you wait, your premiums can rise rapidly,” said Schwartz.