As boomers age, this coverage looks hot
America’s more than 77mn baby boomers are getting ready to retire, with several already past age 65. Still more are in their 40s and 50s—the prime time to start planning for their future.
Part of that planning will likely include considering a long-term care policy, says Tom Riekse, Jr., managing principal at LTCI Partners in Lake Forest, Ill.
“People become aware of the need for [long-term care insurance] in their 40s because at that point, they normally have adult parents who are experiencing long-term care issues,” Riekse said. “They think about it for a while, and then generally buy in their mid-50s.”
“It’s not like life insurance, where there is some level of urgency, such as marriage or purchasing a house,” he added. “With long-term care, there’s not that one triggering life event.”
Given that roughly a quarter of the country falls right into that age group, Riekse said he expects demand for long-term care coverage will increase in the near future.
However, he warns that long-term care is still primarily “a product for the affluent” and producers should be careful about who they target.
“The premiums can average $2500 or $5000 annually for a couple. You’ve got to be able to afford that to make that happen,” he said. “A prospect for long-term care will be someone in their 40s or 50s who is a planner, has some savings and has a good income. Be realistic in terms of who you market to or who you approach with the product.”
Those premium rates are likely to increase this year as a result of the American Association for Long-Term Care Insurance’s new price index, which now reflects gender-based pricing.
According to the index, women and couples are now paying much more for long-term care while men are paying 15% less for coverage, compared to last January. Under employer-sponsored plans, however, men and women pay the same rates.
This affects how consumers will likely purchase their coverage, Riekse said—something producers should watch out for.
“If you’re a man purchasing [long-term care] from your employer, you may end up paying a little more than you would on your own,” he said. “If you’re a woman, you may get a better deal from your employer.”
Other advice for producers looking to enter the long-term insurance space?
“Know that it’s not going to be a walk in the park,” Riekse said. “It’s a niche product and [producers] won’t be product experts. They should really partner with a specialist.”