Consumers Want Lower Cost LTC Coverage

Consumers are increasingly interested in the less expensive LTC policies, according to a survey by John Hancock. Thirty percent of consumers prefer a lower cost LTC policy over a traditional policy. That compares to 14% of consumers in a previous survey. Thirty-six percent of consumers age 45 to 51 prefer the lower cost policies compared to 11% in the previous survey.

Laura Vail Wooster of John Hancock Long-Term Care Insurance said, “This study confirmed our belief that interest in LTC insurance would rise quite significantly, particularly among younger buyers, when less expensive alternatives are offered and explained…Lowering the cost of LTC insurance is critical to making this coverage more accessible to a broader population. Traditional LTC insurance options have become more expensive over the years, so the industry must keep pursuing innovative solutions to help more Americans prepare for and cover at least some of this cost.”

On behalf of John Hancock, the Forbes Consulting Group surveyed 300 people, aged 45 to 65, with a household income above $70,000 and investable assets above  $100,000.

The policies that consumers looked at were the same except for the benefit increase option and corresponding price. They offered a three-year benefit totaling $164,000 and a 90-day elimination period. The traditional policy reflected a CPI inflation option, which grows on a compounded basis according to increases in the Consumer Price Index. The lower cost option reflected an option that grows gradually based on the performance of the general account that funds the policy.

For each example, people were shown John Hancock’s actual annual premium costs based on their age. They were then shown illustrations of how potential benefit increases could differ between the two policies and how the respective increases related to the anticipated increase in the cost of care. Consumers indicated the following preferences:

• 64% are interested in basic coverage at an intermediate price. They would be willing to pay some LTC costs out-of-pocket.
• 22% prefer full coverage at the highest price.
• 14% prefer catastrophic coverage at the lowest price. They would be willing to pay a significant amount of the initial cost of LTC out-of-pocket.

For more information, visit johnhancock.com.

Last Updated 9/8/2017

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