Needs and challenges faced by consumers seeking LTC insurance

November is Long-Term Care Awareness and as the financial-services industry celebrates this important marketing campaign, a new survey by One America Financial is shedding light on the needs, barriers and challenges consumers face on their long-term care journeys.

According to the survey, an overwhelming majority of Americans who are interested in long-term care (LTC) protection believe they will need long-term care at some point in their lives, but only 33% are confident in their plans.

“Our focus in commissioning this study was to go deeper to understand how consumers feel and what they need,” said Dennis Martin, president, Individual Life & Financial Services, OneAmerica Financial. “With that understanding, we can deliver effective products and solutions, and perhaps most importantly, how to start productive conversations about long-term care in the marketplace. People have questions, and they continue to struggle to find the answers. We can help provide more certainty.”

Key findings

Key findings of the survey include:

• Consumers want peace of mind. More than half of consumers (52%) believe that a plan alleviates worry; yet, only one-third are confident they have a plan in place that will meet their goals.
• Younger consumers are more confident than their older counterparts. Younger consumers (ages 40 – 49) prioritize long-term care planning (75%) and are confident in their current plan (55%); by contrast, only 17% of older consumers (ages 60+) express confidence in their plan.
• Planning is personal. Having a family member who needed long-term care is a significant catalyst for creating a long-term care plan (88%) and for buying long-term care protection (75%).
• More guidance is needed. Many survey respondents want support (44%) when they are selecting long-term care coverage, with 31% citing a lack of information about their options as a barrier to buying.

Another finding shared by the survey is that consumers want help in evaluating the wide range of long-term care coverage choices. In particular, the youngest segment surveyed (ages 40 – 49) said they need “a lot” of support from family, friends, doctors and insurance professionals to quantify their needs, understand their options, and target their research. Nearly a third of that group said they have not purchased long-term care insurance because there are too many choices.

“Consumers want a voice in their care – where they will receive it, who will provide it and the quality they can expect. The best way to do that – and still protect their retirement nest egg and any legacy they want to leave – is to identify how they might pay for long-term care in the future,” said Jeff Levin, vice president of Care Solutions, OneAmerica Financial. “What’s clear from this research is that consumers need help with long-term care planning. That’s where financial professionals can step in and help tailor long-term care protection strategies consumers can feel confident about.”

Forces behind interest in LTC protection

So, what is driving consumer’s interest in LTCI? “We are an aging society,” Levin said. “By 2030, all Baby Boomers will be 65 or older. By 2050, Americans aged 65 and older will represent 23% of the U.S. population. These numbers reflect a major demographic shift in which age-related health issues are increasingly prevalent. Notably, the number of Americans living with Alzheimer’s disease is expected to nearly double by 2060, placing greater demand on caregivers and health care systems alike.”

As the Baby Boomer generation continues to age, the generation behind them (age 40-55) is seeing their parents or loved ones needing LTC and realizing they need to make sure they are protected when they need care in 20-30 years.
“Younger cohorts are now realizing they will need an LTC plan and shopping for one,” Levin added. “Our recent survey found that 75% of respondents said witnessing a loved one need care was a major catalyst towards creating their own LTC plan.”

Levin added that consumers buy an LTC plan for a variety of reasons, but the survey results showed a few common ones. 52% said they bought a plan for peace of mind with a focus on not having to worry about coverage down the road. 46% said they want to know that when they need care, they won’t have to worry about how to pay for it or losing their life savings. An additional 46% said they don’t want to be a burden to their families and 46% said that they want to protect their assets during retirement.

What they desire in a policy

Given a choice, consumers want to remain at home in the event that they need long term care, said Levin, in explaining some of the features that consumers want in an LTC policy. Solutions that cover care in a variety of settings, from home to assisted living to facilities, is oftentimes the number one sought after benefit, added Levin.

“In addition,” he said, “a variety of funding options makes coverage more affordable whether it be a single premium that is paid once, splitting payments over a specific number of years (e.g. 20 years), or the ability to pay annually. Also, the ability to reposition existing savings, qualified dollars, or current investments that are sitting idle increases funding sources.”

Why more consumers don't  buy LTCI

So, why are more consumers not buying LTC protection? The cost of a plan continues to be a sticking point for a lot of consumers who have researched LTC but haven’t pulled the trigger on buying a plan, said Levin. About 54% chose cost as the biggest barrier. Others listed competing financial priorities (35%) and a lack of information about LTC plans (31%). Ultimately, Levin stressed, consumers are looking for guidance.

Helping get needed protection

Through education, many of the concerns surrounding purchasing protection are alleviated as a financial professional can better guide consumers and provide tailored solutions to meet individual needs, Levin said. “Consumers are seeking support and help in navigating options, he added. “Financial professionals have an opportunity to help consumers have more confidence, create more certainty, and show that paying for a plan should be seen as a long-term investment.”

The survey was administered online by Hanover Research in May 2024 to 1,000 respondents ages 40 and older, recruited via a panel. Respondents were geographically dispersed across the United States and evenly divided by gender. The full Leading Tomorrow: 2024 Long-Term Care Consumer Study and whitepaper can be viewed here.

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].