Long-Term Care (LTC) Planning Studies
At some point in their lives, most people will need long-term care support. The stats don’t lie. But most people don’t respond to stats, they respond to meaningful conversations.
Let’s explore the information you can use to start the discussion with your clients.
A national provider of insurance and financial services for 145 years, the companies of OneAmerica collaborated with Hanover Research to engage with over 1,000 consumers to better understand their behaviors and thinking regarding long-term care (LTC) planning.
Get a complete copy of both our studies here and learn more about how consumers and financial professionals view LTC.
For many people, LTC planning isn’t top of mind. In fact, few folks ever want to ponder the what-ifs of having a long-term care event. Though, the consequences of not considering LTC coverage can be devastating.
Explore our studies to get a better understanding about the perspectives of your peers and clients. Then use the data to enhance your LTC conversations.
Consumer Study Highlights
For people in the planning or preplanning stages, this study identifies how LTC fits into their future, along with their level and comprehension of these necessary steps. Additionally, the study assessed the preparation taken by those with family members receiving LTC support.
Most consumers are unsure of their likelihood of ever needing long-term care (LTC), and few have taken specific actions to plan for such a possibility in the future.
Only 29% of those surveyed have researched options around LTC planning, and even fewer (18%) have worked with a financial professional on such planning strategies. Just 16% have actually implemented a plan.
This uncertainty likely contributes to their relatively low prioritization of LTC-related planning, with 67% of respondents viewing it as only a medium priority or lower and have even lower confidence in their current LTC plans. Only 16% are highly confident.
Even those who may be considering the eventual need for long-term care are not taking into account the expenses around it. They expect to pay for such care with personal savings (63%) and Social Security/Medicare (53%). While each case varies, Medicare does not typically pay for non-skilled assistance with Activities of Daily Living (ADL), which make up the majority of long-term care services.
Costs of long-term care vary greatly depending on location and situation, but estimates range from $2,000 - $9,000 per month. That certainly may not be sustainable for the average customer’s budget.
As with most matters of the heart, family members are the most trusted and the most consulted partners for LTC-related discussions.
Following family members, consumers would most trust financial services professionals (40%) and doctors (39%) with such discussions. Notably, however, very few have actually spoken with such parties (18% and 7% respectively).
A family or friend’s experience with an injury or illness requiring long-term care is the most common source of consumers’ familiarity by a wide margin (52%). The top motivation to purchase LTC insurance is removing the financial burden from one’s family (66%), reinforcing that family comes first.
Consumers consider cost most important when considering LTC insurance.
Even if they do believe they will need LTC, they expect personal savings and/or Social Security/Medicare to pay for it. With the significant costs associated with LTC, there could be serious implications to their longterm financial strategy.
They see the costs of LTC insurance (53%) and medical support associated with LTC (44%) as the most prevalent barriers to purchasing. Lack of certainty around the need for such care (34%) follows, emphasizing consumers’ doubts about the likelihood that they will need LTC.
Instead, consumers place the highest importance on saving enough money for retirement (86%), eliminating debt (74%), and creating liquid emergency funds (68%). The reality for many is that they are likely to experience a long-term care event. When they do, without the right protections in place, the costs may significantly impact those goals they highly prioritize.
Consumers’ impressions of traditional LTC protection are largely neutral or negative. In contrast, perceptions of asset-based LTC protection are more positive. Among consumers aware of LTC protection, only a quarter are aware of alternatives to traditional LTC protection. When forced to choose, consumers prefer asset-based LTC protection.
Some of the highest percentages in the survey were revealed when discussing the most appealing features of LTC protection. Consumers could select from a list of features, but they were especially drawn to the idea that premiums don’t increase (94%), tax-free benefits (92%), unchanging benefits (90%), and the ability to pass any unused amount to heirs (84%). If your clients have a need for long term care protection, be sure to discuss all the benefits mentioned in the survey and then see where that discussion can take you.
What’s the difference?
Asset-Based Long Term Care protection
Asset-based long-term care protection is designed to always pay a benefit- this could take the form of life protection combined with long-term care benefits, which would pay the face amount for care services or if care is not needed, will be passed to heirs upon death.
Traditional Long Term Care protection
With traditional long-term care insurance, you pay a premium for as long as the policy is in effect and make a claim if/when you need services covered. A traditional long-term care plan will usually offer the lowest initial annual cost. Premiums are not guaranteed.
Your clients need you
As shown in the study, few people have implemented an LTC plan, feel familiar with the relevant factors, or feel confident in their current plans. Helping your clients understand the basics of LTC planning is the first step to helping families feel more secure and protected. These stories expose key misconceptions and offer ways the financial services community can deliver on promises when customers need us most.
Financial Professional Study Highlights
The reality is that unless they have a loved one who experiences an LTC event, the majority of Americans will not have a conversation about LTC coverage unless it is initiated by their financial professional.
Financial professionals see removing the financial burden from clients’ families as LTC insurance’s top selling point.
The other top-selling points include providing financial security, ensuring clients receive adequate care, and client health concerns. Understanding these selling points is important when starting conversations with clients. But more importantly, knowing that these selling points align with consumers’ perceived purpose of LTC planning can ensure everyone feels comfortable and is on the same page.
This is why our two LTC studies were conducted — to be able to compare the two perspectives. In this instance, consumers’ perceived primary purpose of LTC planning lines up almost perfectly. Their top two reasons for wanting the coverage are to remove the potential financial burden from their family and provide financial security. Rounding out their top four reasons are to avoid worrying about potential long-term care events (because they’d have a plan in place) and having confidence that they’ll receive adequate care if it’s needed.
According to our study, only 26% of consumers are actually aware of the alternatives to traditional LTC insurance.
This becomes apparent when examining the top three reasons financial professionals recommend traditional LTC insurance to their clients. And they are: ease of understanding, familiarity with it, and lower cost of it. While there is nothing inherently wrong with these reasons, they are more focused on the ease of the solution rather than its benefits.
But when we asked financial professionals what their top three reasons were for recommending asset-based LTC protection, a stark contrast emerged. These reasons were: ability to pass unused assets to their heirs, combining life insurance with LTC benefits, and being able to provide tax advantages. All of the reasons are focused on providing value to the client.
Both of our studies show that cost is the biggest barrier to buying or recommending LTC insurance.
But what are the trade-offs for going with a less expensive option (or none at all)? At what price point are you no longer offering something of value to your clients?
With asset-based LTC protection solutions you are able to address the cost concern by discussing how your clients can reposition their existing assets. According to our study, only 32% of consumers have some type of LTC insurance as part of their current plan to pay for LTC needs. And 48% of them plan to use their personal assets (e.g. savings, retirement accounts, current income stream), while 36% do not yet have a plan.
By discussing with your clients how they can reposition some of the assets they have earmarked for LTC needs, you can help them see the value in protecting their portfolio. That it’s not just another expense to deal with. Let’s also remind them the appeal of tax-free benefits and the ability to pass unused assets to their heirs.
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The OneAmerica LTC Consumer Planning Study was administered in association with Hanover Research. It was distributed online to professionals recruited via a third-party panel provider. This analysis includes responses from 978 participants surveyed, following data cleaning and quality control. Respondents were at least 40 years old, currently planning for the “retirement era” of their life. Individuals, or anyone in their immediate family, did not work in the insurance industry.
The OneAmerica LTC Financial Professional Planning Study was administered in association with Hanover Research, distributed online to professionals recruited via a third-party panel provider. This analysis includes responses of 412 participants surveyed, following data cleaning and quality control. Respondents were at least 18 years old, employed in the United States as a financial professional (e.g. investment professional, retirement planner, estate planner, insurance agent, long-term care specialist, or Medicare specialist) and were at least aware of LTC insurance.
Hanover Research is not an affiliate of the companies of OneAmerica.
A national provider of insurance and financial services for 145 years, the companies of OneAmerica help customers build and protect their financial futures. OneAmerica offers a variety of products and services to serve the financial needs of their policyholders and customers. These products include retirement plan products and recordkeeping services, individual life insurance, annuities, asset-based long-term care solutions and employee benefit plan products. Products are issued and underwritten by the companies of OneAmerica and distributed through a nationwide network of employees, agents, brokers and other sources who are committed to providing value to our customers.
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