When long-term care insurance (LTCI) was introduced in the mid-1970s, it provided only for care in a nursing home.
Beginning in the 1980s, insurers began issuing new policy forms that expanded benefits to include additional care services. New policy designs over time have grown to cover not only nursing home care, but stays in assisted living facilities, in-home care and even adult day care.
Traditionally, LTCI policies have been designed to help fill the financial gap with benefits not provided by traditional health insurance, Medicare coverage or personal savings.
Many of the changes have come about because of the challenges and uncertainty facing Medicare and Medicaid. long-term care insurance coverage has also become more flexible, allowing policyholders to tailor a plan that best meets their needs.
Growth of “now” benefits
Long-term care insurance coverage has expanded to include not only direct care but a growing number of “now” – or immediate – benefits designed to help policyholders live longer, healthier and happier lives. These “now” benefits help people build holistic retirement plans designed to help protect their financial assets, while promoting healthy living in order to maintain their quality of life.
“Now” benefits also meet the growing demand for ancillary services, such as caregiver support and wellness programs that provide encouragement, education and tools for people transitioning from the workplace to retirement. These benefits help address the perception that there is no immediate value when purchasing a long-term care policy, which can dissuade some consumers from proper planning.
“Now” benefits are also attractive to people who haven’t reached retirement age, don’t fully understand what long-term care insurance covers, and don’t understand the advantages of purchasing coverage when they’re younger. People commonly believe that they won’t need long-term care until they’re much older, or perhaps not at all. On the contrary, it is estimated that half of all Americans 65 or older will need long-term care at some point. When that time comes, they don’t want to become a burden on their families.
Buyers skewing younger
It appears that the drive to educate people about long-term care is working. Buyers are skewing younger. As recently as 2000, the average policy was written on a 67-year-old, while in 2008 the National Clearinghouse for Long Term Care Information found that 83% of new applicants were under the age of 65, with the average being 58. In addition, the study found that 40% of people receiving long-term care services were between the ages of 18 and 64.
New options help maintain independence
Consumers’ care preferences have changed over the years with the array of new care facility options. Today, most consumers prefer to receive care in their homes, and according to claims data from Genworth, more than two-thirds of the company's initial benefit claims are for home health care.
Recent alternatives to traditional care options, including adult foster care, have emerged as valuable options for those seeking a balance that includes home and community-based programs. Other trends, such as in-law apartments, which provide separate housing arrangements attached to a single family home, create a sense of independence for care recipients. Distant caregiving is also a growing trend. Family caregivers are leveraging technologies such as mobile-health applications to monitor loved ones who live farther away. With remote technologies, caregivers can monitor medication and other medical needs, as well as other activities.
These trends in care services are proving that consumers and advisors need to change the way they think of long-term care. The insurance industry has responded with new and innovative long-term care products. Staying on top of evolving trends and being able to discuss them with clients is crucial for advisors. The underlying message is preparation. By helping them create a long-term care plan, advisors will assist their clients in maintaining independence, having control over retirement savings and having more choices when it comes to receiving care. It’s important for advisors to:
- Stress to clients the importance of having a conversation with their families
- Emphasize the benefit of having a financial professional review and update their plan on a regular basis
- Educate clients on the projected costs of long-term care, address competing priorities and help to close the knowledge gap
- Offer next steps in the planning process by providing a few simple actions for clients to get started
- Encourage consistent follow-up as a crucial step
To get started, suggest that clients make a list of priorities. Help them eliminate guesswork by asking critical questions, such as what their spouse’s wishes are should they experience a long-term care event.
The long-term care insurance industry can play an important role in the future as statistics show that 70% of people will need care during their lifetime. As the industry continues to evolve, there is an opportunity to inform and inspire clients to not leave their care to chance but rather implement a long-term care plan as part of their holistic retirement portfolio.