As we enter 2009, some significant trends are impacting the long-term care insurance industry.
Heightened consumer awareness, younger buyers, reformulated products and the intensification of multi-life sales -- have led to a steady growth of long-term care insurance policies. Despite some adverse factors -- in particular, the weakened economy -- we anticipate that sales for the just-ended year will be in the 385,000 policy (and group certificate) range, with premiums up several percent over the prior year. For 2009, our predictions all point to continued growth in the number of Americans who are purchasing this form of protection.
What's driving the continued growth of new policy sales, and how can insurance professionals capitalize in the year to come? The industry is benefiting from heightened positive coverage within consumer print and broadcast media about the importance of long term care planning. More importantly, many of the reports convey important information about the best ages to start planning (with a slant toward pre-retirement) and what constitutes appropriate and affordable coverage. News stories are actually telling consumers when and how to procure insurance protection.
Once primarily a senior product, buyers of long term care insurance continue to get younger. As recently as 2000, the average policy was written on a 67-year-old. Last year, according to Association studies, some 83 percent of all new individual applicants were under the age of 65, while the average age was 58. As a result of the significant demographic shift, leading insurers have retooled their product offerings to address the two primary concerns of younger buyers: affordability and the concern about paying many years for something that might not be needed.
The result has been the introduction of a variety of "life stage" long term care insurance policies that enable policyholders to lock-in their health insurability and purchase a more limited level of protection with the future ability to purchase additional coverage periodically in the future. Provisions for these policies vary, and it's fair to recognize that the added coverage is purchased at attained-age rates. That said, the ability of agents to now allow pre-retirement-age buyers to "kick the tires" by owning some long-term care insurance offers one of the greatest opportunities to expand and grow market penetration into the future.
Looking ahead, three significant marketing opportunities will likely yield the greatest results for producers seeking to identify new prospects or convert their existing clientele into long-term care insurance prospects.
The first is recognition of maturing awareness among consumers. The industry has entered a new phase of awareness; one that requires focus on new messaging pertaining to health insurability, affordability and the ability to receive care in one's own home.
For those targeting seniors, the increasing number of states rolling out LTC Partnership policies has generated a good deal of excitement among insurance agents who must now complete additional continuing education training. The opportunity to build sales -- especially among middle-income consumers -- will be predicated on the willingness and ability of states, insurers and agents to promote the importance of LTC planning, coupled with the key benefits provided by Partnership provisions. It's still very early in that process.