Who typically purchases long-term care insurance (LTCi) policies? We’ve got your answer.
When you sell non-primary forms of coverage, such as LTCi, it’s critical you develop a clear image of what qualified prospects will look like. To help you identify ideal clients for LTCi policies, we’ve created a profile containing the characteristics of a conventional LTCi buyer.
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A Typical LTCi Buyer is…
Familiar with Long-Term Care
Many people who purchase LTCi tend to know someone, such as a parent, grandparent, or friend, who has received LTC. Because of their exposure to the costs of LTC and the risk and reality of needing it, they’re likely more open to buying an LTCi policy.
Fast Fact: Nearly 35 percent of LTCi policyholders purchased their policies when they did because a loved one needed LTC, according to a Mutual of Omaha study.
Insurable for LTCi
While the underwriting requirements vary from carrier to carrier, individuals can usually be written into an LTCi plan if they’re:
- Between the ages of 18 to 79
- Not currently receiving LTC
- In reasonably good health
Due to underwriting requirements becoming more strict, we strongly encourage agents to prequalify clients early in the LTCi discussion. Keep in mind, if you do come across clients with medical conditions that you believe may disqualify them from LTCi coverage, we may still be able to find them a great LTCi solution. Today, there are many alternatives to traditional LTCi policies, including life and annuity-based hybrid products.
An Upper Middle Class or Upper Class Individual
Depending on the carrier, product, and issue age, LTCi insurance premiums can be a couple of hundred dollars a month. Therefore, individuals who have a higher net worth are ideal for LTCi policies. These clients may have:
- Between $200,000 and $2 million in assets
- CDs or investment accounts
- An old life insurance policy or deferred annuity that can be leveraged using the IRS’ 1035 exchange
Pro Tip: The annual premium of an LTCi policy should not exceed 7 to 10 percent of a client’s yearly income for it to be affordable.
Most LTCi buyers don’t think about purchasing LTCi until later in life as they’re preparing for life post-retirement. This puts the ideal client for an LTCi policy in their early 50s to mid-60s.
- In Mutual of Omaha’s study, approximately 55 percent of the participating LTCi buyers purchased their policies when they were 55 to 64 years old.
- Nearly 52 percent of the participating LTCi buyers reported planning for retirement prompted them to buy LTCi.
Independent, Protective, and/or Proactive
Health insurance and Medicare purchases are transactional, while LTCi purchases are more emotional. Therefore, you should focus on clients who are independent, protective, and/or proactive.
- Independent: Wants future health care to be on their own terms; doesn’t want family to have to commit to taking care of them; desires to remain in their own home or live in their preferred facility
- Protective: Wants to ensure they will not burden their family physically, mentally, or emotionally; doesn’t want to drain their nest egg or their children’s inheritance money; doesn’t want to put their retirement dreams in danger
- Proactive: Wants to plan for the future; recognizes the risks to their future health and financial security; willing to take the steps necessary to ensure they can handle whatever comes their way later in life
Research shows that women are more likely to be both caregivers and care recipients. It also shows that women tend to live longer lives than men. These qualities make LTCi a great product for females.
- Sixty percent of caregivers and 65 percent of care recipients are female, according to a 2015 Study by the NAC and AARP Public Policy Institute.
- A study from the Centers for Disease Control and Prevention (CDC) shows that women account for approximately 70 percent of residential care community residents and almost 67 percent of nursing home residents.
- In 2015, the life expectancy for men was 76.3 years, and for women, it was 81.2 years, according to the CDC’s report “Mortality in the United States, 2015.”
A caregiver’s health can decline faster than that of the care recipient’s due to the mental, physical, and emotional strain of providing care. Married individuals often want to protect their spouse and their assets. They want to ensure that, should they need LTC in the future, their spouse’s lifestyle will not be impacted more than it has to be. Additionally, they want to avoid becoming a burden on their significant other.
Fast Fact: The American Association for Long-Term Care Insurance’s 2014 Sourcebook reports that approximately 82 percent of LTCi buyers are part of a couple.
But Don’t Forget…
In a study conducted by Genworth, a whopping 78 percent of men and women indicated they would find it helpful to talk to a financial professional about LTC planning, however, only 16 percent of people said they’ve had that discussion.
Whether you have a preconceived idea if a client is a good match for LTCi or not, you should still briefly discuss the importance of LTC planning with him or her. Making this topic a part of your conversations with clients can save them future stress and heartache, as well as safeguard your business from potential lawsuits.
While defining your target market is essential to your success, not turning a blind eye to those who might not display all or any of these traits will be your key to achieving the best results.
Interested in learning about Ritter’s LTC solutions and sales support tools and services? Send us a message.