As members of the insurance and financial services industry, you probably talk a lot about long-term care insurance (LTCI). Whether it’s in the pages of Advisor Today, at the water cooler or in front of a seminar of prospects, the subject tends to get a pretty full airing. Even if you don’t sell LTCI, chances are you have a more-than-basic understanding of the product and how it can help your clients. Perhaps you’ve even recommended some of your clients to a colleague who specializes in LTCI.
Participants took a 15-question quiz on LTCI and only a paltry 2 percent scored high enough to earn a “B” or better.
The point is, we’re so inundated with LTCI information—from surveys on various policies, to hints on selling the product—we may forget that, to the average client, LTCI may be a completely foreign concept. In fact, many clients may be under the false impression that their long-term care needs will be taken care of by the government when the time comes.
The cold, hard facts
It may sound preposterous, but these are the cold, hard facts, according to a new study from MetLife, which found that only 37 percent of Americans between the ages of 40 and 70 have the information they need to help them make decisions about their long-term care needs. As part of the study, MetLife asked participants to take a 15-question quiz on LTCI and only a paltry 2 percent scored high enough to earn a “B” or better. The majority of participants, 63 percent, received a failing grade.
Even more striking is the fact that 41 percent of the survey participants believe that long-term care is a government entitlement that all Americans become eligible for at retirement. Those who had this false impression cited programs like Medicare and Medicare Supplement—aka Medigap—as programs that would cover long-term care expenses.
“Many Baby Boomers have misconceptions about long-term care and often do not realize that the need for care can happen at any stage, and that Medicare does not cover the costs,” says Gloria Cavanaugh, president and chief executive officer of the American Society on Aging. “As more and more Boomers find themselves caring for their aging parents, they often become more aware of the emotional, physical and financial issues that result when a loved one becomes ill and needs help with day-to-day activities. This experience can serve as a wake-up call.”
But it wasn’t just consumers who had misconceptions about long-term care and the need for LTCI. In a companion study, MetLife examined the coverage given to long-term care issues in major media outlets and found on many occaisions, articles either omitted key facts, or presented false information about long-term care and LTCI. The study examined five wire services, 12 magazines and 26 newspapers for stories on long-term care issues looking for these seven basic categories of information:
- Definition of long-term care
- Definition of LTCI
- Qualification for LTCI
- Benefits of LTCI
- Purchase considerations
- Product features
- Costs of LTCI
The study found that the media outlets increased their coverage of LTCI issues by 26 percent between January 1, 2002 and June 30, 2004. However, that coverage did not always meet the high standards imposed by MetLife. Overall, 85 percent of the articles published during this time frame had at least one error or omission. Of that number, 38 percent were omissions of the basic definitions associated with long-term care and LTCI.
While 21 percent of the articles studied included misstatements about long-term care issues, most of the errors and omissions found by MetLife fell into the “omissions” category, suggesting that major media outlets simply need to do a better job of including all the facts relevant to long-term care issues. However, the survey also pointed to a need for LTCI education among the media, noting that 74 percent of misstatements concerned LTCI specifically.
Stick to the basics
The results of these twin studies are clear: Consumers need more basic information and understanding of long-term care issues, particularly LTCI, and they aren’t necessarily going to get it from the mainstream media. So what’s the solution? Clearly the advisor needs to step in and begin to educate clients about their long-term care concerns, highlighting problems and solutions rather than pushing products. Advisors must extol the benefits of LTCI, focusing on the financial, emotional and lifestyle benefits of the product, while making perfectly clear that Medicaid and health insurance are not adequate substitutes for a comprehensive LTCI policy.