Despite how your clients may benefit from long-term care insurance, many don’t have it. In fact, LIMRA found overall sales of LTCI have gone down since 2009. Sales of LTCI policies fell 22 percent between 2013 and 2014, sending the compound annual growth rate to negative 9 percent for 2009 to 2014.
Only 131,000 Americans bought LTCI last year, which means many Americans are missing out on coverage that mitigates the risk of unexpected future expenses.
In a nation where people are living longer and potentially face high medical and living costs associated with disability, disease or even normal aging, it’s troublesome to see the number of people taking advantage of important insurance products fall.
Were your clients part of those who purchased LTCI insurance last year?
If not, it’s time to speak with your clients about the risks of disability, the likelihood of needing significant medical care in the future and how long-term care insurance may be right for them.
Why people aren’t buying LTCI
One reason the overall rate of LTCI purchases has declined in recent years is that people don’t want to spend money on nonessentials. In 2009 especially, the recession made market conditions worrisome and disadvantageous for many of your clients, further leading them away from what they considered to be optional expenditures.
Financial producers should speak with their clients about the need for long-term care insurance.
Another reason is that people thought LTCI was unnecessary because they would be covered by some other insurance product. Nationwide Financial President and Chief Operating Officer John Carter stated many older Americans mistakenly believe the Affordable Care Act will cover their long-term care needs during retirement, Fox Business reported.
“Not understanding the Affordable Care Act and making some false assumptions is a big deal,” said Carter.
Why people should buy LTCI
LTCI coverage has evolved over the years and now there are more options for your clients. Most LTCI covers the cost of health care in a variety of facilities or even at-home care. Additionally, you don’t have to pick a set amount at a younger age and live with it when you’re older. Many LTCI policies allow you to increase coverage with a guaranteed purchase option or scale back benefits with contingent nonforfeiture clauses.
Additionally, there are now tiers of coverage so your clients don’t have to purchase a policy that will cover all of their expenses if they feel total coverage is too much. Instead, many policies have levels, and your client can purchase a policy that better matches their financial situation.
Cost of LTCI coverage
How much a LTCI policy costs will likely influence your clients on whether to purchase a plan, but policies are well within most of your clients’ budgets.
LIMRA found the average cost of coverage for a qualified applicant in 2014 was $2,049 for the first year of coverage. This is only a 2 percent rise compared to average costs in 2013.
LTCI is not only an affordable option for your clients, it’s a smart one. The likelihood your clients will need long-term care in the future is high, whether it’s from a chronic condition, disability or a normal part of growing old. Speak with your clients today about how prepared they are for the financial ramifications of long-term care.
