What do consumers think about the need for long-term care?

We often read about the consumer’s need for long-term care,  but insights into what consumers think about the need for such protection is seldom addressed.

A white paper by OneAmerica Financial offers some critical insights into consumers’ attitudes about long-term care planning. These insights should help financial professionals understand what consumers think about LTC protection and what they want and value in an LTC protection plan.

The white paper is based on two studies conducted by One America Financial as part of its mission to help families navigate the complexities of LTC planning and identify solutions for policyholders and caregivers, The first, completed in 2022, explored consumer awareness of LTC needs, including reasons for, and barriers to buying LTC protection. The 2024 study was on consumers who have researched LTC options. Many had personal experiences with LTC, either through direct involvement or by witnessing the impact on their loved ones and informal caregivers.

What drives consumers to do LTC planning?

The following are some of the insights shared by the report:

Peace of mind: For many consumers, a significant driver in creating an LTC plan is peace of mind, the white paper said. Not having to worry because there is a plan in place if something were to happen is comforting to many consumers. Other drivers include knowing that an LTC event will not devastate their finances or retirement planning, and confidence that they will receive adequate care if it is needed.

Personal experience with long-term care: Although most consumers over the age of 60 said that experience with a close family member or friend who needed LTC drove them to create a plan, younger consumers (those in their 40s) with the same experience are significantly more likely to take action on LTC (96%) by purchasing insurance (89%). In addition, younger consumers place higher priority on meeting their families’ protection needs with hybrid solutions that combine life insurance with LTC protection.
What are some of the obstacles to LTC planning?

Cost a significant barrier: Consistent with insights gained in the OneAmerica Financial 2022 study, cost concerns remain the biggest barrier (54%) to consumers planning for LTC. While Americans are now generally sold on the need to plan, rising interest rates and stubborn inflation may have contributed to their reluctance. Nearly half now cite the cost of medical and other support related to LTC needs, and more than a third said that competing financial priorities are getting in their way. Other barriers include a lack of information about care options, uncertainty about if they will ever need LTC, too many options to consider, reluctance to leave their homes, and not wanting to think about getting sick.

What does LTC insurance really cost?

As the paper pointed out, cost is the biggest hurdle when consumers are planning for LTC. But the paper asked: Do consumers who have researched the options understand the cost of LTC policies? When OneAmerica Financial asked consumers what they believe the cost of LTC protection is per month, the responses varied widely. Given each client’s individual needs and protection options, it’s essential for consumers to weigh the pros and cons with a knowledgeable financial professional, the paper said.

How can demonstrating value help overcome the cost hurdle?

Perceived cost and competing financial priorities, especially among older consumers, serve as significant hurdles in the decision to purchase LTC insurance. But rather than a challenge, financial professionals can help educate consumers on the value they can get for their premiums. This value includes protection against potentially catastrophic LTC expenses and, with hybrid insurance, the ability to protect and leave a legacy to loved ones.

How do consumers plan to fund their LTC?

Overall, the paper said, about half of consumers expect to use their personal savings, LTCI, and health insurance if they need LTC. Other sources include Medicare, hybrid insurance (life plus LTC), Medicaid and long-term disability insurance.

In conclusion, the paper noted that consumers are open to hybrid options and professional guidance. An aging population, coupled with consumer preferences for how and where LTC is given, is fueling growth in hybrid solutions. These life/ LTC protection products are flexible in how they pay out — for LTC, as a death benefit, or for both.

Even so, while 64% of respondents are prioritizing LTC planning and 74% think they’ll need LTC someday, only 33% feel confident about their current plans. This, the paper said, highlights the need for professional guidance. Survey data has shown that consumers can benefit from clear direction and education about their LTC options, including hybrid protection, which can address LTC needs and complement existing financial plans.

The survey was administered online by Hanover Research in May 2024 to 1,000 respondents aged 40 and older.

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