Are the holidays a good time to have a long-term care conversation?

Is the holiday season a good time to discuss long-term care with family?  OneAmerica Financial's findings showed a 20% increase in long-term care claims in November and December versus the other months of the year.

“It’s a natural moment to have those meaningful conversations about how families can support each other and plan for things like long-term care to ensure their loved ones are protected,” said Amy Chinn, vice president of long-term care claims at  OneAmerica.

Derek Ober, founder of Ober Financial, a Northwestern Mutual agency, sees a jump in long-term care inquiries in January and February. “I generally get inquiries around long-term care planning as more people may be having the difficult conversation while meeting with their family members over the holidays.”

Ober notes that people are worried they’ll need long-term care. He believes it’s the responsibility of the advisor to bring it up and start the conversation. “With people living longer, they may need help with activities for daily living. It helps to have a plan in place,” he says.

“One of the goals of having a long-term care policy in place is to make sure all your family is still speaking after you are no longer at the Thanksgiving table. Having a care need usually lands on one of the siblings, which can cause hostility and hard feelings. My goal is to keep all the family together emotionally, even during or after a long-term care need,” says Angela McLaughlin, a career agent with One Team Financial Group, a general agency of OneAmerica Financial.

A OneAmerica study, 2024 Long-Term Care Consumer Study, found that 74% of Americans think they are likely to need long-term care in the future, and nearly two-thirds (64%) say this planning is a priority — but only 33% are confident in their current plans.

According to the Department of Health and Human Services, a majority of Americans turning 65 (56%) will need some level of long-term care services within their lifetime. However, industry trade association Limra estimates just 3% of Americans over age 50 have any long-term care insurance protection, which could lead to many people having to pay for these expenses on their own.

And the expenses can add up quickly. According to the American Association for Long-Term Care Insurance, the average out-of-pocket costs are $140,000 for those individuals who use paid long-term support services. Roughly 17% will spend over $100,000, and almost 9% will spend over $250,000 on these services.

“People need to know that Medicare will not cover long-term care costs. It’s always better to have it and not need it than to need it and not have it. I’ve seen the difference it makes for people who have this coverage when they need it,” Christopher Koon, Partner, Socium Advisors, a Northwestern Mutual private client group, says.

Consumers are looking for help from an advisor when it comes to planning for their needs. The OneAmerica study reveals that 44% of Americans want support when selecting long-term care protection.

According to Karen Terry, corporate vice president and head of LIMRA insurance research, “Because long-term care is a complex product, it is purchased with the help of a financial professional.

“It’s not like you wake up one day and see the need for long-term care insurance. I think it’s really the value of having an advisor who can explain the various options,” says Koon.

Caregivers see the need

According to Limra data, more than 7 in 10 say being a caregiver has impacted how they think about their own future care needs. These consumers are more likely to want to proactively plan for their potential LTC needs and worry about becoming a burden on their loved ones. Consumers, in general, say they are attracted to the flexibility of the products and the peace of mind they get because they have financial protection should they need care.

“Those who have experienced an event where a family member needed care are more open to long-term care planning. It’s one of those products you don’t sell – people see the need,” Koon notes.

“I start with asking them if they have any experience with such a need. If so, I listen and ask them about the expense portion of the care need, as well as the emotional stress involved. If they do not, I usually tell them my experience with my father and then get into the cost of care in their area. Most people have some idea of the costs but never consider what this looks like for them,” McLaughlin says

According to the OneAmerica consumer study, 75% who are planning for long-term care said that witnessing a loved one in need of care was a major catalyst for buying protection.

Various product options

According to Limra’s Karen Terry, there are a variety of products, including individual stand-alone long-term care insurance, life insurance/LTC combination products, life insurance/critical illness policies, and a small number of companies offer an Annuity/LTC product. “They range from being less expensive with less benefits to more expensive with more benefits,” she says.

According to Limra, the market share from new products is 8% individual long-term care insurance, 25% are life/LTC combination products, and 67% are life insurance/critical illness products.

“When it comes to deciding on which product, there is no perfect solution because we don’t know what the future holds. People need to look at how much they think they’ll need,” Ober says.

“If clients buy a combination life insurance/LTC product, they have the advantage of a death benefit, but also having some money set aside for long-term care if needed. I always say that having something is always better than having nothing,” he adds.

Koon agrees. “I encourage these hybrid products for younger people because they can be very affordable. Long-term care coverage is not as expensive if you’re young, healthy and mobile. I like to bring up the need for LTC planning with my clients in their late 40s and early 50s. You need to educate your clients on what the various options are.”

Long-term care products are evolving 

“Historically, a lot of companies went out of business because their products weren’t priced correctly. Now the pricing is better, so hopefully more companies will enter the market,” Koon says.

In a new study, conducted jointly by LIMRA and EY, 4 in 10 carriers surveyed said they expected long-term care product innovation to be the number one driver of growth in the coming years. Limra also noted that companies have already begun to enhance their products with caregiver resources and wellness programs.

“If you don’t plan for long-term care, the cost if you need it can be out of reach. For families, it provides dignity having someone else take care of the person’s basic needs so they can spend quality time with them,” Koon says

He adds that hybrid life/LTC products have gotten very popular. “Similar to homeowners’ insurance, people don’t like paying for something they may or may not need. These hybrid products solve that because in the end we’re all going to die,” he says.

According to the OneAmerica study, 75% of younger Americans (ages 40-49) are prioritizing long-term care planning. In total, 55% of those 40-49 years old are confident in their current plans — just 17% of those over age 60 express the same confidence.

McLaughlin urges her clients not to wait. “The longer you wait, the more money you will spend on the insurance and your insurability will not be guaranteed. People do not tend to become healthier with age,” she says. “Take a look at the costs and what it would do to your current retirement planning if such a need would arise.”

Perceived cost and competing financial priorities, especially among older consumers, serve as significant hurdles in the decision to purchase long-term care insurance. “With more choices on the market, people are more likely to find the care they need at an affordable price. It might not be as expensive as most people think,” Chinn says.

Terry agrees. “Long-term care insurance used to be a lot more expensive since it needed to be purchased with a single premium or with a few payments. Now the payments have been extended, making it more affordable.”

“As someone experienced in this field, my attitude is that if you have the funding available, it is truly a legacy protector due to the cost of care increasing so dramatically, as well as the length of claim we see due to the cognitive decline issues on the rise in our society,” McLaughlin says.

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