The pandemic brought consumer awareness about the need for life insurance, but it didn’t have the same impact on long-term care planning, according to new research from a 2022 OneAmerica consumer study on long-term care.
Only 15% say the pandemic has been highly influential on their perceptions of needing long-term care, the array of personal assistance, and services people need over an extended time period because of a chronic illness or disability.
Indianapolis-based OneAmerica collaborated with Hanover Research to survey more than 1,000 consumers about their perceptions and behaviors related to long-term care (LTC) planning. The LTC survey identified consumers’ comprehension and perspectives of cost, preparation and confidence to implement an LTC plan, as well as their preference of asset-based long-term care protection, and who influences their decisions on LTC. The survey results signify that LTC is not top of mind for most consumers. This finding proves even more important considering November is National Long-Term Care Awareness Month.
A vast majority of consumers haven’t researched LTC protection options, despite the high probability they will need it.
According to The Administration for Community Living, it is estimated that almost 70% of individuals over the age of 65 will require a form of long-term care services at some point in their lives. However, the recent survey from OneAmerica shows that few consumers have an LTC plan in place, and only 16% have implemented a plan for LTC. Although 84% of consumers express at least slight confidence in their LTC plan, only 29% have researched options around LTC.
Less than half of those surveyed have worked with a financial professional on a retirement strategy. Of those who have, LTC remains a low priority compared to personal saving and debt elimination. Most consumers are unsure of their likelihood of ever needing LTC, and so they have not taken appropriate action to prepare.
“The results from this study make it clear that consumers need the help of the financial services industry to better understand long-term care,” said Jeff Levin, vice president and head of distribution of Care Solutions at OneAmerica. “Consumers have misconceptions of long-term care that financial services professionals are uniquely positioned to address to help them be protected and prepared.”
Consumers have various financial factors and product offerings to consider, along with people who influence their decisions.
Most consumers consider the cost of LTC to be a barrier, but they may not properly assess how not having LTC protection could impact their long-term financial strategy.
With 53% of consumers citing cost as the most prevalent barrier to purchasing it and 34% being unsure if they would use it, consumers are prioritizing other financial goals. Consumers place the highest importance on saving enough money for retirement (86%), eliminating debt (74%), and having sufficient emergency funds (68%). While these are important goals, putting off the purchase of LTC protection can be costly because premiums increase. In addition, people run the risk of becoming uninsurable.
Although consumers are slow to implement a plan, they tend to be attracted to the features LTC provides. They are particularly drawn to asset-based long-term care protection, which features paying a benefit, even if care is not needed. Of the 25% who were familiar with asset-based LTC protection, consumers preferred its benefits over traditional LTC because of premiums not increasing (94%), the tax-free benefits (92%), unchanging benefits (90%), and the option to pass it on to their family (84%).
“Consumers who are familiar with asset-based LTC protection recognize its advantages,” said Levin. “The protection offers valuable benefits whether it is ever needed, and it’s an effective means of creating greater efficiency, while maintaining access and control of money and care.”
The survey results also pointed to family as highly influential in people’s decisions around LTC. Consumers revealed they trust family members the most, and 52% rely on a family or friend’s experience as a source of familiarity. Following family members, consumers most trust financial services professional (40%) and doctors (39%). The top motivation to purchase LTC insurance is removing the financial burden from one’s family (66%), reinforcing the influence of family on LTC decisions.
Learn more about how consumers view long-term care and download the full consumer research survey.