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.
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 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.
Fast Fact: According to 2019 statistics from the American Association for Long-Term Care Insurance, the average age at policy purchase is 66 years old.
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.
- In 2019, 65 percent of care recipients were female and 75 percent of all caregivers were female, according to statistics gathered by the Family Caregiver Alliance (FCA).
- According to the CDC, in 2018, the average life expectancy for males was 76.2 years whereas the average life expectancy of females was 81.2 years.
- The American Association for Long-Term Care insurance reports that over three-fourths (75.7 percent) of residents in assisted living communities are women.
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 reports that in 2019, approximately 50 percent of LTCi claimants are married.
But Don’t Forget…
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.
Editor’s Note: This article was originally published in January 2017. We’ve since updated it to be more current.