Younger Adults Increasingly Buying Long-Term Care Policies |
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Written by U.S. Insurance News
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Friday, 02 February 2007 |
Employee benefit provider Unum, which holds 75 percent of the group long-term care insurance policies in the United States, reports that buyers of such policies are getting younger. More than 52 percent of purchasers are under 45, the company says.
You can't accuse all young adults of procrastinating when it comes to planning for their future care—or not knowing exactly what they want.
Employee benefit provider Unum, which holds 75 percent of the group long-term care insurance policies in the United States, reports that buyers of such policies are getting younger. More than 52 percent of purchasers are under 45, the company says.
In addition, most policy purchasers are opting for home health care. According to Unum, sales of the home health care option have risen to 92 percent of policies sold, up from 88 percent in 2003.
"The sales growth in this market is based on two things: better information available to employees on the need for long-term care, and simplified and more affordable policies from carriers," explained John Noble, director of long-term care products. "The younger you buy, the lower the premium cost. And features like the home care option address our desires to 'age in place.'"
Unum added nearly 1,000 new businesses to its group long-term care customer base last year, an increase of more than 15 percent from 2005 sales. Its long-term care policies cover about 600,000 working-age employees. In addition, Unum holds about 200,000 individual long-term care policies.
The increase in the purchase of group long-term care policies coincides with the significant increase in the number of employers who are willing to help pay for this benefit, Unum notes. Ninety-two percent of cases last year included some level of premium contribution by the employer. According to Unum, this is a big shift from the 100-percent employee-paid coverage that represented most of the market in past years.
In addition to the age of policy buyers trending downward and employee participation in these purchases trending higher, Unum reports other significant factors about the long-term care policy market:
- Women account for 52 percent of the purchasing population, and white collar workers are the segment with the most growth over the past three years. Most frequent industries that purchase long-term care insurance are insurance brokerages, law firms, engineering firms, physicians, and management consulting services.
- Coverage amounts are shifting higher. As consumers see the costs of health care rise, they want policies that will provide a much greater monthly benefit. Over the past three years, Unum reports a 2 percent increase in those selecting the $5,000–$6,000 monthly benefit, and 3 percent decline in those selecting the $2,000–$3,000 range of coverage.
- Unum expects to see growth in popularity of policies that include an option that raises the benefit amount by a certain percentage each year to compensate for rising care costs. According to the U.S. Senate Special Committee on Aging, long-term care costs are expected to double by the year 2025 and almost quadruple by 2050.
"A year in a nursing home can vary greatly from $40,000 in some states up to $100,000 in others," Noble said. "Inflation protection is a great option to help keep the benefit payout in line with market costs."
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