Editor’s note: Cathy Sikorski is a longtime columnist with Rethinking65. Read more of her articles here.
Cathy Sikorski
The two-day annual ILTCI Conference, held in Philadelphia this year through the Intercompany Long-Term Care Insurance Conference Association, was chock-full of workshops. Just as valuable were the behind-the-scenes conversations on how to bring long-term care to those who so desperately need it now or in the future. Yes, I said now.
People often believe that long-term care insurance must be purchased well in advance. In other words, buy now, when you have no problem, hope for the best, but if you need it, you have it. That is generally true with all kinds of insurance. But the window of opportunity for purchasing long-term insurance is not as short as many people believe.
According to many of the conference speakers, there are plenty of innovative ideas for bringing this benefit to those who already seem “too old.” And yet, fewer people are buying long-term care insurance, even though the population is aging and many have witnessed caregiving crises.
Approximately 7.5 million Americans have some form of long-term care insurance — either traditional or hybrid policies. A traditional policy provides either an indemnity payout (a predetermined cash payment to the policyholder) or a reimbursement policy for expenses incurred. A hybrid policy links life insurance or an annuity to a long-term care benefit. If that benefit goes unused, the beneficiaries receive a payout upon the policyholder’s death.
The industry is continuing to develop new types of LTC products, but the market hasn’t responded as quickly as expected. The number of new policies purchased declined from approximately 322,000 in 2012 to 153,687 in 2021. Exact figures for more recent years are limited because the industry lacks a consistent reporting mechanism.
Why Dismal Interest in LTC Insurance?
One of the workshops I attended included a panel of salespeople well-seasoned in the long-term care market. They’ve turned their focus to the group marketplace, hoping to convince employers and employees that long-term care insurance is as critical to their family’s health as regular, old-vanilla health insurance.
The panelists think that making this coverage a group-insurance benefit, even if the employees bear the cost, will generate a better response for two reasons. First, any group benefit has a shared cost (The primary complaint about long-term care insurance is that it costs too much.) Second, a group setting gives a sales team the opportunity to educate the consumer about the benefits.
And then it hit me: Every workshop I attended at the ILTCI Conference noted one common theme regarding the challenge of getting long-term care insurance into the hands of the consumer: A lack of education.
Education is the Door
The panelists I mentioned earlier said the key for boosting enrollment in long-term care coverage is having an off-enrollment period that’s separate from health-insurance enrollment. Providing a dedicated education process, and giving employees time to focus on the needs and benefits of this coverage while they’re not bogged down with selecting a health plan, would improve enrollment in LTC insurance by a significant number of percentage points, they said.
What does the education process involve and how is it rolled out?
I posed this question to panelist Adam Ruder, a vice president and regional sales leader with J. Manning & Associates, a national independent insurance brokerage and consulting firm specializing in group voluntary long-term care insurance solutions.
Adam’s first comment: “Long-term care insurance is bought, not sold.” When he approaches an employer, he focuses on helping them understand that getting their employees engaged with the importance of long-term care insurance is the key to a successful rollout. Ultimately, you want to ensure that the employee has sufficient information to make a true decision about how long-term care insurance can be a solution to an ever-increasing problem, he said.
Four Essential Points
According to Adam, education should hit these key points:
What is LTC insurance?
What need does it solve for?
What benefit does it provide?
Why is it important now?
Adam added that this last point is underscored by the fact that science, technology and medicine are working to keep us living longer.
Adam and his industry peers are also finding that employees may be more inclined to purchase an additional benefit like LTC through the workplace market because that’s where they already receive the majority of their benefits (including health, disability and life insurance),
“Education increases awareness, and awareness increases sales,” continued Adam. “We understand that education in long-term care insurance must continue to increase over time, and change with the marketplace in how it is delivered. The messaging from our industry needs to get better every day, because we are firm believers in the enormous benefits of this product.”
Creative Marketing is the Key
The other dilemma of getting long-term care insurance into the hands of the consumer is marketing. If education is the door to success, marketing is the key that opens the door. In order to get potential clients to the door, the marketing has to be spot on.
During another session I attended, presenter Andrew Graff, CEO of the advertising agency A&G (Allen & Gerritsen), opened my eyes to the fault in our stars. “Wake up, people,” he seemed to say. “You’ve been doing it all wrong when it comes to the senior market.”
Ever since the advertising days of “Mad Men,” we have been living in a youth culture. Improving people’s life as they age has not been the focus of most marketing campaigns. “We are data rich and insight poor,” said Andrew.
“The most powerful, influential and misunderstood demographic are baby boomers,” Andrew added. “Marketers spend 10% of their budget on baby boomers and yet they have 70% of the disposable income!”
A disconnect, indeed. And long-term care is no exception.
A Word on Boomers
Boomers are not the retirees their parents were. They are “retirement rejectors,” in Andrew’s words. They keep working, they create new work, they do new stuff, and they travel more than ever before. Boomers are also loyal, fiercely brand loyal. Their loyalty is also a part of their reliance on word-of-mouth. Because they trust their friends, or even the friends of friends, they buy through that kind of connection. In fact, according to Andrew, it’s the greatest way they buy.
The boomer generation has more time and more money than their parents. Consequently, they use that money to shore up every possible part of their multi-generational relationships. They want to spend time with those children or grandkids who moved far away — either through travel or through technology. And LTC insurance may help them preserve their children’s inheritance and let their children live their lives without having to become full-time caregivers to their parents.
How Advisors Can Educate
Financial advisors and other professionals who work with advisory clients need to boost education and meet potential clients where they are — not where marketers think they are.
I learned from Andrew and Adam that it comes down to being ‘unignorable.” By taking our message of LTC to our audience in a way that is audience obsessed — not product obsessed, not new-and-shiny obsessed, not engaging in older ways that aren’t working — we can increase awareness, education, and hopefully client preparedness for potential long-term care events.
The costs of caregiving are glaring — especially when you factor in inflation. According to data shared by the Federal Long-Term Care Insurance Program, if inflation averages 2.32% each year, the average annual cost of nursing-home care will over the next 20 years increase from $100,740 to $159,372.
A Deeper Dive
According to all the panel experts, we need to get creative! Stop thinking old people and nursing homes. We need to talk to clients about their interests — which may include traveling, continuing or starting important work, and staying up with technology while playing games on their phone with their 6-year-old granddaughters! Share with them that few are immune to the needs of long-term care. Dive deeper into how they’d ideally like aging and care to look like for them, and the value they place on financial security.
Most people want to stay in their home, but how does that work? How does one pay for extra help and fixing up their environment? What does independence and care look like and cost for your loved ones? It’s a conversation that needs a new focus.
Also ask your clients who are still in the workforce if their employer offers long-term care group insurance. And talk to your business-owner clients about how group long-term care insurance is becoming a more common benefit that could help their employees and help them (by attracting and retaining more talent). According to the 2024 AARP Workforce Report, 61% of the nation’s 48 million unpaid family caregivers are in the workforce. As I like to remind employers, unpaid family caregivers are your employees and they understand the real value of long-term care insurance.
The Good News
Adam of J. Manning & Associates shared that many years ago he saw the need for LTC insurance in his own family. He encouraged his parents to buy a policy. Now, 20 years later, his family needs those benefits. As he put it, “When my dad was convinced that protecting his own livelihood and the livelihood of his family was paramount, the decision was easy. Now, when we have to pull that lever, we have a lever to pull.”
The good news is policyholders who have read their policies over the years and are conversant with their policy benefits are paid 96% of the time they file a claim. When policyholders pay for long-term care for years and their claims are denied, nine times out of ten this is because their policy didn’t cover what they expected.
So, talk to your clients soon about their expectations for future care. With many people opting to stay in their homes for as long as possible, and living longer, I encourage you to also explore long-term care policies that will pay for professional and family caregivers in the home. By listening to clients’ real needs, there is much opportunity for you as an advisor to help them and to help them help their families.
Cathy Sikorski, Esq., is an elder attorney, speaker and author who unravels the complex financial and legal problems of caregiving and aging. She hasbeen a caregiver for eight people. Cathy uses her experience to educate, entertain and elevate the conversation at work and in the corporate setting around money, retirement, aging and caregiving. Her third book, “12 Conversations: How to Talk to Almost Anyone about Long-Term Care Planning,” published in October 2021 by Corner Office Books, is available on Amazon.
