Purpose of Presentation Track and compare product purchase trends between 1990 and 2010. Compare...

Purpose of Presentation• Track and compare product purchase trends

between 1990 and 2010.

• Compare attitudes and characteristics of current and past buyers and non-buyers as well as a sample of individuals from the general population age 50+.

• Obtain view of consumer attitudes regarding the role of the public and private sectors in LTC financing.

• Provide information about how to approach market barriers.

2

Participating CompaniesNine companies, representing the vast majority of total individual sales and diverse market segments in 2010-2011, contributed to the study

Bankers Life and Casualty Genworth Financial John Hancock Long-Term Care Partners MedAmerica Metropolitan Life Mutual of Omaha Northwestern Mutual Prudential

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Sample Size

• Buyers (paid a premium and were beyond free look)• 1,493 returned surveys

• Non-Buyers (met agent and chose not to buy or returned in free look period)• 408 returned surveys

• General Elders (random sample age 50+)• 500 completed interviews

• Individual Policies Analyzed• 8099 policies

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What are Key Trends in Socio-Demographic Characteristics of Buyers in

the Individual Market?

5

Socio-Demographic Characteristics of Buyers

Characteristic 2010 2005 2000 1995 1990

Average Age %> 70

598%

6116%

6540%

6949%

6842%

% Married 69% 73% 70% 62% 68%

Median Income% > $50,000

$87,50077%

$62,50071%

$42,50042%

$30,00020%

$27,00021%

Median Assets% > $75,000

$325,00082%

$275,00083%

$225,00077%

$87,50049%

N.A.53%

% College Educated 71% 61% 47% 36% 33%

% Employed household

69% 71% 35% 23% N.A.

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Socio-Demographic Differences Between Buyers, Non-Buyers and General Population

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College Graduates

Income Greater than $50,000

Assets Greater than $100,000

Someone in Household Employed

Marital Status0%

25%

50%

75%

100%

68%

74% 77%

67% 69%

46% 47% 46%52% 57%

44%

52%

40%

55% 61%

Buyers Non-Buyers General Population

Average Age: Buyers 59 years; Non-Buyers 67 years; General Population 64 years

Perceptions About Who Would Pay for Long-Term Care

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Medicaid or Medicare

Other Health Insurance

Self or Family Reverse Mortgage

Other Don't Know0%

25%

50%

75%

16%10%

59%

1% 1%

13%

28%

9%

37%

1% 3%

22%20%14%

37%

1%6%

22%

Buyers Non-Buyers General Population

Believe That Risk for Needing Care is Greater than 50%

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Nursing Home Care Home Care0%

25%

50%

75%

62%

70%

58%66%

29%

54%

Buyers Non-Buyers General Population

What Are People Buying and How Have Trends Changed Over Time?

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Summary of Characteristics of Policies

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Policy Characteristics Average2010 2005 2000 1995 1990

Policy Type Nursing Home Only Nursing Home & Home Care Home Care Only

2%92%6%

3%90%7%

14%77%9%

33%61% 6%

63%37%---

Daily Benefit Amount for NH Care

$154 $142 $109 $85 $72

Daily Benefit Amount for Home Care

$153 $135 $106 $78 $36

Integrated Policy Elimination Period

89 days 81 days 47 days 46 days ---

Nursing Home Benefit Duration 4.8 years 5.4 years 5.5 years 5.1 years 5.6 years

Percent Choosing Inflation Protection

74% 76% 41% 33% 40%

Age 55-64 Age 65 to 69 Age 70 to 74 Age 75+$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$2,255

$2,759

$3,294

$3,949

Long-Term Care Insurance Premiums in 2010

Average Premiums in 2010: $2268

Why Do People Choose to Buy or Not Buy LTC Insurance?

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Most Important Reason for Individual LTC Insurance Purchase

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Avoid Dependence

Protect Assets/

Leave Es-tate

Guarantee Af-fordability

Protect Liv-ing Stan-

dards

One of Other Reasons

0%

10%

20%

30%

40%

18%

33%

13%18% 17%

23%

36%

18%

14%10%

2010 2005

Reasons Why Buyers Bought Policies Now

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Worried health would prevent getting insurance later

Cost of insurance would increase in future

Thought it was good idea to have now

I could afford it now

Know someone who recently needed LTC

Comfortable with product and have enough information to make decision

0% 20% 40% 60%

7%

54%

15%

8%

5%

7%

If govt paid for

care when bene-

fits ceased

Tax de-

ductibility

If I though

t the risk of use was

greater

If I could get dis-

counts on

service costs

If rates re-

mained stable

Other

0% 10% 20% 30% 40%

29%

26%

15%

8%

14%

8%

28%

22%

19%

10%

9%

12%

27%

21%

15%

12%

12%

13%

2000 2005 2010

Most Important Factors Leading Current Non-Buyers to Consider Buying a Policy

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Don't Believe Insurers

Hard to Choose Policy

Too Costly Waiting for Better Policy

0%

25%

50%

75%

18%13%

61%

20%17% 14%

53%

19%15%

18%

54%

29%

20%

28%

57%

31%36%

54%58%

41%

2010 2005 2000 1995 1990

Most Cited Very Important Reason for Individual Not Buying Insurance

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Plan to buy before retirement

Plan to buy around retirement

Plan to buy after retirement

Do not plan to buy at all

Undecided about whether to buy

0% 25% 50% 75%

7%

2%

4%

31%

56%

Non-Buyers Plans for Purchasing LTC Insurance

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What Goes Into the Consideration of Specific Policy Purchase?

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Factors Important to Specific Purchase Decision

Company's repu-tation

Agent rec-ommenda-

tion

Company's financial rat-

ing

Policy cost Policy Benefits0%

25%

50%

75%

63%59%

46%

37%

31%

63% 62%

46% 44%

23%

41%

48%

33%

32%

23%

2010 2005 2000

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Attitudes About Role of Government and Private Financing

of Long-Term Care

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Attitudes About Government and Roles in LTC Financing Among the General Population Age 50+

Characteristic 2010 2005 2000

It is the Federal government’s responsibility to pay for LTC needs of ALL people 25% 34% 42%

Whatever health reform comes about in the next few years, it is more likely that individuals will have to rely n themselves to plan and pay for LTC

85% 79% 77%

Private insurance companies provide good LTC products that are a good value for the money 46% 32% 34%

It is the federal government’s responsibility to encourage people to buy LTC insurance by allowing premiums to be fully tax deductible whether or not one itemizes

73% 73% N.A.

It is the federal government’s responsibility to encourage people to buy LTC insurance by allowing employed individuals to use pretax dollars to pay for insurance

63% N.A. N.A.

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Single Most Important Action Government Should Take in Area of LTC Financing

0%

10%

20%

30%

40%

50%

41%

14%

30%

9%6%

26% 26%22%

10%

16%

32%

24%

18%

12% 13%

2010 2005 2000

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Awareness Among Individuals Age 50+ of Long-Term Care Insurance

Aware of Insurance Covering LTC

Been Approached to Buy LTC Policy

Considered Buying an LTC Policy

0%

25%

50%

75%

57%

43% 41%

66%

43%38%

63%

46% 45%38%

28%21%

2010 2005 2000 1995

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Knowledge about Partnership Policies Among the General Population Age 50+

Partnership Question 2010

Does your state participate in a LTC Partnership Program?

Yes No Don’t know

7%18%75%

If your state did participate in a Partnership Program, how likely would you be to buy a private LTC insurance policy?

Likely Not Likely Don’t know

45%51%4%

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Conclusions• LTC buyer is getting younger.• Policies continue to provide comprehensive

coverage.• The reasons and factors why people bought

or did not buy policies remain fairly stable over the past five years, with a somewhat greater emphasis on protecting living standards.

• General attitudes toward LTC insurance are improving and most people believe that the federal role should be to encourage purchase of the insurance.

• Government action designed to lower the net cost of insurance /services is what is most desired by the public.

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Questions

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