LTC insurance was developed in response to the overwhelming numbers of older adults who use all of their assets, including their homes, in an attempt to pay for care when they need it. Many older adults find it impossible to take care of themselves due to chronic illness or physical or mental disability and find that health insurance policies don't cover their needs.

Why Consumers Aren't Buying Policies
The baby boomer generation, the largest in numbers of any generation, is also the one that coined the phrase, "Don't trust anyone over the age of 30." This group is now well over the age of 30. In fact, these individuals are close to or already in the midst of their 40s and some are in their 50s. Is it any wonder that anti-wrinkle creams, vitamin and herbal supplements and cosmetic surgery are booming industries? Add to that fitness equipment, clothes and shoes -- all continue to experience record sales.

 

It's obvious that many baby boomers are doing everything possible to stay young, active and healthy. There's nothing wrong with that unless it makes them unable to recognize that down the road they may require some form of long-term help -- even if it's many years away. Or does this group feel tapped out with all the other insurance policies they're paying for, the demands on their household budget for family expenses such as education, housing, food, etc.? Many consumers don't realize that the older they are when they purchase a LTC policy, the more it will cost.

 

Experience is always the best teacher. If baby boomers haven't yet had to face this particular life crisis with their own parents, can they really be expected to consider that it will happen to them?

 

Several consumer rights groups and the media have also logged substantial criticism regarding LTC insurance, commenting on its significant cost, on the fact that some policies do not provide substantial coverage, and that some policies are not explained thoroughly or well enough to consumers trying to make the decision of whether or not to buy. It is possible that some consumers are reacting to the media coverage and opting against LTC insurance.
 
Federal Government Initiatives
With the sheer numbers of baby boomers inching toward becoming the next population of older adults, there is great concern about the stresses that will be placed on Medicare and Medicaid. As a result, legislators and government officials have a vested interest in the success of LTC coverage. They're working to create incentives both for employers to offer the insurance coverage (and perhaps to subsidize a portion of the cost) and for individual consumers to purchase it.

 

According to the National Association of Health Underwriters (NAHU), there are currently no fewer than 12 pieces of proposed legislation regarding LTC insurance offering tax credits or deductions for the purchase of LTC. The sooner legislators consolidate and then pass one or more pieces of legislation, the more likely consumers will be to consider purchasing LTC coverage.

 

How Agents and Insurance Companies Can Influence Policy Buying Behavior
Purchasing a policy can be overwhelming to consumers who don't understand the differences between a tax qualified and a non-qualified plan or the differences between coverage limits, exclusions and definitions. An insurance agent not only must function as a salesperson but also as an educator in order to make the sale. This means finding out as much as possible about the products being sold. Are there time limits on coverage (such as one, two or three years -- or ceilings on the total amount of dollars available to the subscriber)? Does the policy cover in-home care as well as nursing home? Does it cover assisted living?

 

The more comprehensive the policy is, the more likely it is that a consumer will be interested in it. Of course, the more comprehensive the policy is (generally), the more expensive the payments will be.

 

In addition to making certain that their LTC policies provide substantial coverage for subscribers, insurance companies must use their resources to present comprehensive consumer and employer education campaigns that explain the role of LTC insurance and illustrate the limitations of Medicare and Medicaid.

 

Concerns for the Insurance Industry
Since the LTC insurance industry is relatively young, the history of claim payments may not be enough to accurately estimate the true cost of providing this coverage to a large subscriber base. This, in turn, may affect insurance company profits, increase the cost to subscribers and cause some companies to drop out of this market altogether.

 

The industry must stay abreast of all legislation regarding this insurance coverage, the tax incentive/deduction legislation and any consumer protection legislation that may appear later. If the managed care/health insurance industry is used as an example, when the LTC insurance product matures and more consumers initiate claims, problems may occur that prompt consumers to contact their legislators. Legislators in turn support their constituency, and the rest is history in the making.