2017 Long-Term Care Thought Leadership Research

Transcription

1 2017 Long-Term Care Thought Leadership Research Findings from Surveys of Advisors and Consumers Part I and II Lincoln Financial Group and Versta Research October 2017 Originally published February 2018 Insurance products issued by: The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value 2018 Lincoln National Corporation

2 2017 Long-Term Care Thought Leadership Research Part I Lincoln Financial Group and Versta Research October 2017 Originally published February 2018 Insurance products issued by: The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value 2018 Lincoln National Corporation

3 Contents Research Methods... 3 Consumers...4 Long-Term Care Planning... 5 Burdens of Long-Term Care... 9 Financial Planning for Long-Term Care Paying for Long-Term Care and Long-Term Care Insurance Advisors...22 Approach to Financial Planning Long-Term Care Planning Need for Long-Term Care Insurance Appendix Page 3

4 Research Methods Versta Research, a third-party research firm, was commissioned by Lincoln Financial Group to design and conduct two surveys one among consumers and one among producing financial advisors on the topic of long-term care attitudes, experiences, and planning. Consumer Survey Sample of 1,012 U.S. adults Recruited from a national online research panel used exclusively for polling and research Sample was stratified by age, gender, sexual orientation, race and ethnicity, region, and income Final data was weighted to match U.S. Census on age, gender, race, ethnicity, and region Advisor Survey: Sample of 500 producing financial advisors Recruited from a national online business panel used exclusively for research To qualify for the survey, advisors had to have familiarity with long-term care or hybrid products, minimum 5 years tenure as an advisor, and a minimum average client portfolio of $100,000 Advisors represent a full range of channels, including independent broker dealers, wirehouses, regional and insurance broker dealers, banks, and others The surveys were conducted from August 28 to September 22,

5 CONSUMERS 5

6 Consumer Survey Attitudes Long-Term Toward Care Long-Term PlanningCare 6

7 One-third of Americans surveyed believe they will need long-term care. More believe a parent or spouse will. Perceived Likelihood of Needing Long-Term Care 33% likely Self 13% 19% 35% 21% 12% 40% likely Spouse 13% 15% 31% 26% 15% 50% likely Parent 16% 11% 23% 25% 25% Not at all likely (1) (2) (3) (4) Extremely likely (5) Q16. How likely do you feel it is that: a. You will need long-term care sometime (1,012n); b. A parent will need long-term care sometime (766n); c. Your spouse will need long-term care sometime? (759n) 7

8 Most agree that families should discuss long-term care planning, but far fewer have had such conversations. Families should discuss plans for long-term care before they actually need it Conversations about Long-Term Care 97% agree 50% Agree strongly Agree somewhat Disagree somewhat Have talked with About who would provide long-term care... About how long-term care would be paid for Spouse 52% 47% Parents 35% 27% 3% disagree 47% 3% Disagree strongly <1% Children 29% 24% Friends 22% 15% Q34c. How much do you agree or disagree with each of the following statements: Families should discuss plans for long-term care before they actually need it? (1,012n) Q26. Have you had specific conversations with the following people about who would provide long-term care for you if you needed it? ( n) Q27. Have you had (or did you have) specific conversations with a parent about who would provide long-term care for them if they needed it? (745n) Q28. Have you had specific conversations with the following people about how you would pay for long-term care if you needed it? ( n) Q29. Have you had specific conversations with a parent about how they would pay for long-term care if they needed it? (702n) 8

9 Of those who have provided long-term care themselves, half say they waited too long before discussing plans. We waited too long before discussing plans and options for long-term care 13% 49% agree 51% disagree 35% 29% 23% Agree strongly Agree somewhat Disagree somewhat Disagree strongly Q50b. [IF HAS PROVIDED LONG-TERM CARE] How much do you agree or disagree with each of the following: We waited too long before discussing plans and options for long-term care? (226n) 9

10 Consumer Survey Attitudes Burdens Toward of Long-Term Care Care 10

11 Americans surveyed acknowledge a wide range of burdens on family members who provide long-term care. Biggest Perceived Burdens (% all respondents) Burdens Experienced by Caregivers (% saying difficult) The emotional burden of providing care 72% 84% The physical burden and difficulty of care 64% 62% The time burden of providing long-term care 64% 72% The financial burden of cost 56% 40% The health consequences of stress 51% 46% The financial burden of lost earnings 35% 39% Q25. What do you think are the biggest burdens on family members who provide long-term care for loved ones? (1,012n) Q48. [IF HAS PROVIDED LTC] How difficult was it for you: a. Emotionally; b. Physically; c. In terms of your health; d. In terms of how much time it took; e. In terms of lost earnings from work; f. In terms of the financial cost of providing care? (226n) 11

12 Some want and expect their children and spouses to provide long-term care if needed. Families as Insurance Who Will Provide Long-term Care (multiple select) 47% disagree 53% agree My spouse is my long-term care insurance 20% 27% 44% 10% My spouse Rehab facility or nursing home 27% 43% 43% 41% 65% disagree 35% agree Home health aide 37% 39% My kids are my long-term care insurance 33% 32% 29% 7% My children 27% 30% Disagree strongly Disagree somewhat Agree somewhat Agree strongly Someone else 3% 4% Expect to provide Want to provide Q43. How much do you agree or disagree with each of the following statements: a. My kids are my long-term care insurance (707n); b. My spouse is my long-term care insurance (693n)? Q18. If you need long-term care who will mostly provide this care: My spouse; My children; A home health aide; A rehabilitation facility or nursing home; Someone else(1,012n)? Q19. Who would you want to provide this care? (1,012n) 12

13 Consumer Survey Financial Planning for Long-Term Care 13

14 Most believe advisors should discuss long-term care with clients. But few people have had these discussions. Financial Advisors Should Discuss Long-Term Care Plans with Clients Long-Term Care Conversations with Advisors 90% agree 32% 57% Agree strongly Agree somewhat Disagree somewhat Disagree strongly 14% Have talked with an advisor about how they would pay for long-term care if they needed it 13% Have talked with an advisor about who would provide long-term care if they needed it 10% disagree 8% 2% [BASE ALL] Q26c. Conversations with your financial advisor - Have you had specific conversations with the following people about who would provide long-term care for you if you needed it? Q28c. Conversations with your financial advisor - Have you had specific conversations with the following people about how you would pay for longterm care if you needed it? Q34d. How much do you agree or disagree with each of the following statements : Financial advisors should talk about long-term care plans with their clients? (1,012n) 14

15 Most agree that discussing long-term care with an advisor would be valuable, but the topic is out of mind. Value in Including Long-Term Care in Financial Planning Reasons for Not Talking with an Advisor about Paying for Long-Term Care (multiple select) 20% Very valuable I ve never really thought about it My advisor has never raised the issue 33% 32% 78% valuable 22% not valuable 58% 16% 7% Somewhat valuable Not too valuable Not at all valuable Seems like a low priority right now It is outside of what my advisor does It s too depressing to talk about I don t think I will need long-term care 11% 17% 29% 25% Other reasons 8% [IF HOW YOU WOULD PAY CONVERSATION WITH ADVISOR=NO] Q31. How valuable would it be to discuss this and include it in your financial planning? (150n) Q30. Why have you never talked about how you would pay for long term care with your advisor? (150n) 15

16 Consumer Survey Paying for Long-Term Care and Long-Term Care Insurance 16

17 Respondents in the consumer survey (like advisors) underestimate the cost of nursing home long-term care. Annual Cost of Nursing Home Care as Estimated by... $150,000 $125,000 $100,000 $103,000 $75,000 $75,000 $50,000 $54,000 $25,000 $0 Actual National Advisors Consumers Average 1 1 Source: LTCG, 2017 Lincoln Financial Group Cost of Care Survey Advisor Q32. What would you estimate is the average annual cost of a private room in a nursing home facility in the United States today? [mean] (476n) Consumer Q46. What would you estimate is the average annual cost of a private room in a nursing home facility in the United States today? [mean] (965n) 17

18 Only a third of Americans surveyed feel confident of having the financial resources to pay for long-term care. "How confident are you that you will have the financial resources to pay for long-term care should the need arise? 34% confident 30% not confident 11% 22% 37% 13% 16% (5) Extremely confident (4) (3) (2) (1) Not at all confident Q45. Overall, how confident are you that you will have the financial resources to pay for long-term care expenses should the need arise? (1,012n) 18

19 Most believe they would pay for care through Medicare, Medicaid, or health insurance. How People Would Pay For Long-Term Care If Needed (multiple select) Medicare or health insurance Medicaid assistance 29% 65% In all, 73% believe they will rely on Medicare, Medicaid, or their health insurance for longterm care My savings or other assets 60% Long-term care insurance 37% Some other way 1% Q20. [IF AIDE OR NURSING HOME WILL MOSTLY PROVIDE CARE] How would you most likely pay for this care? (623n) 19

20 One in seven report having long-term care insurance. Another four in ten are interested. 100% Long-Term Care Coverage 75% 50% 43% 25% 0% 15% Currently Own Interested in Buying Someday Q36. Do you currently have a long-term care insurance policy? [BASE ALL] Q39.How interested are you in purchasing long-term care insurance someday? (1,012n) 20

21 The biggest reasons for not having long-term care insurance are perceptions on cost and being too young. Reasons for Not Having Long-Term Care Insurance (multiple select) Too expensive 44% I m too young 33% Plan to rely on Medicare/Medicaid Annual premiums can keep going up Plan to rely on own savings Too depressing to think about Don t think I will need long-term care Seems like a waste if I never need it Insurance companies may not be able to pay in the future Plan to rely on family for care I m too old Would not qualify given my health Other reasons 19% 18% 15% 13% 11% 9% 7% 7% 6% 6% 7% Q38. [IF NO LTC POLICY] What are the reasons you do not have a long-term care insurance policy? (791n) 21

22 Many see good health and strong faith as the best longterm care insurance. 26% disagree 74% agree Leading a healthy lifestyle is my long-term care insurance 7% 19% 57% 17% 37% disagree 63% agree I shouldn't have to spend my savings paying for long-term care 10% 27% 40% 23% 51% disagree 49% agree Faith that everything will work out is my long-term care insurance 24% 27% 40% 9% Disagree strongly Disagree somewhat Agree somewhat Agree strongly How much do you agree or disagree with each of the following statements? Q34e. I shouldn t have to spend my savings paying for long-term care. Q43c. Leading a healthy lifestyle is my long-term care insurance. Q43d. Faith that everything will work out is my long-term care insurance. (1,012n) 22

23 ADVISORS 23

24 Advisor Survey Approach to Financial Planning 24

25 Two-thirds of advisors take a broad, holistic approach to financial planning. Advisors' Approach to Financial Planning 36% Take a Focused Approach 64% Take a Holistic Approach 99% Want to give clients emotional piece of mind that comes from financial peace of mind 86% Feel it is important to offer advice that supports a client's family Q15. Which describes you better, even if neither is exactly right: I try to help clients with a broad and holistic plan for their overall financial future; I try to stay focused on the financial needs my clients express and have concerns with? Q16. How much do you agree or disagree with each of the following statements: a. It is important to me to offer advice that supports a client s children and other family members; b. I want to give my clients emotional peace of mind that comes from financial peace of mind? (500n) 25

26 Advisors say clients want to plan protection for their spouses and children. Importance of Planning for Children and Spouses 97% important Importance to clients of planning for a spouse s future <1% 3% 49% 48% 67% important Importance to clients of planning for their children 2% 31% 52% 15% Not at all important Not so important Important Extremely important Q11a. How important to your clients is: a. planning for a spouse s future in case something happens to them; b. planning for their children as part of their own financial planning? (500n) 26

27 Advisors feel it is valuable to meet with client with their children or extended family. Value of Meeting Clients Together with Family Frequency of Meeting Clients with Family 8% Very valuable Somewhat valuable 45% 93% valuable Often Sometimes 52% 61% often/ sometimes Not too valuable Rarely Not at all valuable 48% Never 37% 2% 5% 2% Q12. How often do you meet clients along with their children or extended family members? Q13. How valuable (would it be//is it) to meet clients along with children or extended family members? How much do you agree or disagree with each of the following statements? (500n) 27

28 Most advisors see value in addressing long-term care specifically with children and extended family members. Topics Advisors View as Valuable to Address with Children/Extended Family (multiple select) Estate planning 88% Long-term care plans 81% Wealth protection planning 73% Healthcare expenses 65% Life insurance Tax planning 59% 58% Education funding Gift giving 44% 47% Charitable giving 33% Other topics 1% Q14. [IF NEVER OR RARELY MEET] If you were to meet clients along with their adult children or extended family members, which topics would be valuable to discuss? [IF SOMETIMES OR OFTEN MEET] When meeting clients along with their adult children or extended family members, which topics are valuable to discuss? [BASE: IF VALUABLE TO MEET CLIENTS ALONG WITH CHILDREN OR EXTENDED FAMILY] (466n) 28

29 Advisor Survey Long-Term Care Planning 29

30 Nearly all advisors agree that long-term care planning is important for clients. 99% agree Families should discuss plans for longterm care before they actually need it 1% 24% 75% <1% 96% agree Advisors should talk about long-term care plans with clients 3% 31% 65% <1% 96% confident Long-term care planning is in clients best interest 4% 38% 58% <1% 95% important Important that clients include long term care expenses in their planning 5% <1% 45% 50% Disagree strongly/ Not at all confident/ Not at all important Disagree somewhat/ Not too confident/ Not so important Agree somewhat/ Somewhat confident/ Important Agree strongly/ Very confident/ Extremely important Q9d. How important do you think it is for clients to include these things in their retirement planning: Long-term care expenses in case they need it? Q33d. How much do you agree or disagree with each of the following statements: Financial advisors should talk about long-term care plans with their clients? Q41d. How confident are you that long-term care planning is in your clients best interest? Q23b. How much do you agree or disagree with each of the following statements: Families should discuss plans for long-term care before they actually need it? (500n) 30

31 Advisors say only some of their clients are thinking about long-term care expenses. Clients Who Think About Long-Term Care Expenses People are not sufficiently planning for long-term care 5% 28% 42% All Most Some Few 44% 49% Agree strongly Agree somewhat Disagree somewhat Disagree strongly 92% of advisors report having clients who have needed long-term care 22% None 2% 6% <1% Q8d. When you begin working with clients and talk about retirement planning, how many clients are specifically thinking about and planning for how much they will need to cover: Long-term care expenses in case they need it? Q22. How many of your clients have you witnessed experiencing a need for long-term care? Q23a. How much do you agree or disagree with each of the following statements: People are not sufficiently planning for long-term care? (500n) 31

32 Mean Percentage of Clients Advisors have talked with half to two-thirds of their clients about long-term care planning. 100% Percentage of Clients with Whom Advisors Have Discussed... 80% 60% 40% 63% 63% 59% 57% 56% 56% 52% 50% 20% 0% How care costs should factor into their planning Whether they will need longterm care How they would pay for longterm care Whether providing long-term care would be a burden on their family Long-term care insurance Their fears about needing care Who would most likely provide care Who they would want to provide care Q18. With what percentage of your clients have you specifically discussed: a. whether they will need long-term care sometime; b. how long-term care costs should factor into their planning; c. long-term care insurance? Q20. With what percentage of your clients have you specifically discussed: a. who will most likely provide longterm care if they need it; b. who they would want to provide long-term care if they need it; c. how they would pay for long-term care; d. their fears about needing longterm care; e. whether providing long-term care would be a burden on their family? (500n) 32

33 Advisors agree that long-term care can be difficult for clients to discuss. 24% disagree 76% agree Long-term care is a difficult topic for clients to talk about 4% 20% 60% 16% 25% disagree 75% agree Clients are reluctant to talk about long-term care 3% 21% 61% 15% 72% disagree 28% agree Long-term care is a difficult topic for me to talk about with clients 33% 39% 24% 4% Disagree strongly Disagree somewhat Agree somewhat Agree strongly How much do you agree or disagree with each of the following statements? Q33a. Long-term care is a difficult topic for clients to talk about; b. Long-term care is a difficult topic for me to talk about with clients; c. Clients are reluctant to talk about long-term care. (500n) 33

34 Advisors say that typically they raise the topic of long-term care, and clients often prefer not to discuss it. Who usually raises the topic of longterm care, you or your clients? For clients with whom you have not discussed long-term care, is it because... 17% Advisor sees no need to discuss 59% Advisor raises 46% Equal split 32% Equal split 37% Client doesn t want to discuss 8% Client raises Q27. Who usually raises the topic of long-term care, you or your clients? Q28. For clients with whom you have not discussed long-term care, is it because: Usually I see no need to talk about it; Equal split half the time they do not want to talk about it, and half the time I see no need; Usually they do not want to talk about it? (500n) 34

35 The biggest reason for client reluctance is that clients don't think they will need long-term care. Reasons Clients Do Not Want to Discuss Long-Term Care (multiple select) Don t think they will need long-term care 61% Low priority 52% Never really thought about it Too depressing to talk about 43% 42% Cost (vol.) 16% Other reasons 2% Q29. What are the biggest reasons clients may not want to talk about long-term care? (500n) 35

36 Clients become more interested in long-term care planning when they have experience with it. Triggers of Clients Willingness to Discuss Long-Term Care (multiple select) Having someone close to them need long-term care 75% Seeing somebody close become a long-term caregiver 59% Becoming a long-term caregiver themselves Their age 50% 49% Advice from family or friends Having enough income to afford it Advice from an advisor 25% 30% 29% Retiring from a job Having it offered as a work benefit Other triggers 1% 11% 15% Q31. What are the biggest triggers of clients willingness or desire to discuss long-term care? (500n) 36

37 The top reason advisors may avoid talking about longterm care is that clients are not interested. Reasons Advisors May Avoid Talking about Long-Term Care (multiple select) Clients are usually not interested 45% I feel it is a low priority for them 34% I don t think they will need long-term care 17% I do not have good products or solutions to offer them 13% Long-term care seems too far afield from the advising I do 12% Cost (vol.) 9% I don t want to upset them with something that is depressing 9% I am not licensed to sell long-term care products 8% Other reasons 8% Q30. What are the biggest reasons you may not want to talk about long-term care? (500n) 37

38 Median Age of Client Advisors believe age 50 is the ideal age to plan for longterm care, but clients typically wait until age When to Begin Long-Term Care Planning years old years old $500,000 Ideal asset level to talk about long-term care planning 20 0 Ideal Age When Clients Actually Start Q24. In terms of a client s age, when do you think it is ideal to talk about long-term care planning? Q25. At what age, on average, do clients actually talk with you about long-term care planning? Q26. In terms of a client s assets, at what level do you think it ideal to talk about long-term care planning? [median] (500n) 38

39 Advisor Survey Need for Long Term Care Insurance 39

40 Nearly all advisors feel confident about the value of longterm care products for their clients. 93% confident It is smart for clients to have long-term care insurance 1% 6% 45% 48% 89% confident Long-term care insurance is in clients best interest 1% 10% 46% 43% 88% confident Clients need long-term care insurance 2% 10% 50% 38% Not at all confident Not too confident Somewhat confident Very confident Q41. How confident are you that: e. Long-term care insurance is in your clients best interest; f. Your clients need long-term care insurance; g. It is smart for your clients to have long-term care insurance? (500n) 40

41 Advisors agree that long-term care insurance gives clients peace of mind and more confidence about the future. 98% agree Clients who have long-term care insurance feel more peace of mind 0% 2% 48% 50% 96% agree The cost of long-term care scares clients 1% 3% 45% 51% 96% agree Clients who have long-term care insurance feel more confident about their financial future 4% <1% 50% 89% agree 46% Even for high net worth clients who can self-insure, long-term care insurance can provide leverage 1% 10% 52% 37% Disagree strongly Disagree somewhat Agree somewhat Agree strongly Q40. How much do you agree or disagree with each of the following statements: a. The cost of long-term care scares clients; b. My clients who have long-term care insurance feel more confident about their financial future. c. My clients who have long-term care insurance feel more peace of mind. d. Even for high net worth clients who can self-insure, long-term care insurance can provide leverage. (500n) 41

42 Mean Percentage of Clients Advisors say more than half their clients should have long-term care insurance. Far fewer currently have it. Client Need for Long-Term Care Insurance 100% 90% 80% 70% 60% 50% 40% 30% 44% 56% Advisors Estimate that: 21% have enough to self-insure 13% do not have enough worth insuring 11% should not have insurance for other reasons 50% 20% 24% 10% 0% Should have long-term care insurance Expected to need long-term care Currently have long-term care insurance Q17. What percentage of your clients do you think: a. will need long-term care sometime; c. should have long-term care insurance? Q43. About what percentage of your clients currently have long-term care insurance? [BASED ON Q17C, Q19A/B] Q19. Thinking about those clients who you think should not have long-term care insurance, for what percentage would you say: a. they have enough to self-insure; b. they do not have enough worth insuring? (500n) 42

43 Clients without insurance can spend their savings 2 3 times faster than expected if long-term care is needed. 20% Mean Annual Withdrawal Rate from Portfolio 15% 10% 13% 5% 5% 0% Typical client Client experiencing care event without insurance Q10. What is the average annual withdrawal percentage (%) for your typical client taking retirement income from their investment portfolio? (454n) Q44. [SKIP IF DON T KNOW OR DO NOT USE THIS STRATEGY] Previously, you indicated that your typical client taking retirement income withdraws (INSERT RESPONSE FROM Q10) per year. If a client does NOT have a long-term care solution in place and experiences a long-term care event, what do you estimate that the new average annual withdrawal percentage from their portfolio will be? (424n) 43

44 Three out of five advisors say that families are often devastated by the cost of long-term care. I often see families that are devastated by the costs of long-term care 16% 60% agree 40% disagree 44% 32% 8% Agree strongly Agree somewhat Disagree somewhat Disagree strongly Q23c. How much do you agree or disagree with each of the following statements: I often see families that are devastated by the costs of long-term care? (500n) 44

45 APPENDIX 45

46 Demographics of Consumer Sample (1,012n) (weighted) AGE Millennials (After 1980) 32% Gen X ( ) 27% Boomers ( ) 29% Silent ( ) 12% GENDER Male 48% Female 51% Transgender <1% Do not identify as any of the above <1% SEXUAL ORIENTATION Heterosexual 94% Bisexual 3% Gay 2% Lesbian 1% MARITAL STATUS Married 54% Never married 28% Widowed 5% Divorced 11% Separated 1% RACE/ETHNICITY White/Caucasian 65% Hispanic 15% Black/African American 12% Asian or Pacific Islander 6% Native American or Alaskan Native 1% Mixed racial background 2% Another racial or ethnic category <1% REGION Northeast 18% Midwest 21% South 37% West 23% CHILDREN (including adult children) Yes 61% No 39% EMPLOYMENT Employed 62% Not employed 6% Retired 25% Student 2% Stay-at-home spouse or partner 4% HOUSING Own 68% Rent 27% Neither 5% HOUSEHOLD INCOME Less than $25,000 14% $25,000 to $49,999 22% $50,000 to $74,999 19% $75,000 to $99,999 14% $100,000 to $149,999 17% $150,000 to $199,999 7% $200,000 or more 7% INVESTABLE ASSETS Less than $25,000 24% $25,000 to less than $50,000 17% $50,000 to less than $100,000 15% $100,000 to less than $250,000 14% $250,000 to less than $500,000 11% $500,000 to less than $1 million 10% $1 million to less than $2 million 5% $2 million or more 4% 46

47 Profile of Advisor Sample (500n) BUSINESS MIX Investment-focused 59% Balanced 28% Insurance-focused 13% COMPENSATION MODEL Asset management fees 50% Commissions (insurance & brokerage) 45% Planning fees 5% NUMBER OF CLIENTS <100 23% % % % 751 1,000 3% More than 1,000 3% AUM Less than $1M 1% $1M to <$5M 5% $5M to <$25M 18% $25M to <$50M 21% $50M to <$100M 21% $100M to <$250M 20% $250M to <$500M 8% $500M to <$1b 3% $1b or more 2% PRACTICE STYLE Sole practitioner with staff 39% Team-based practice (3+ members) 34% Sole practitioner with no staff 27% CHANNEL Independent BD 45% Wirehouse 13% Regional BD 12% Insurance BD 8% Bank 6% Insurance Carrier 6% MGA/BGA 1% RIA (vol.) 8% Other 1% GENDER Male 81% Female 19% AGE % % % % % 75+ 2% 47

48 LincolnFinancial.com About Lincoln Financial Group Lincoln Financial Group and its affiliates including The Lincoln National Life Insurance Company, Fort Wayne, IN, and Lincoln Life & Annuity Company of New York, Syracuse, NY, provides advice and solutions that help empower people to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against longterm care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $246 billion in assets under management as of September 30, Lincoln is a committed corporate citizen and was named one of the Forbes Best Employers for 2017, is a member of the Dow Jones Sustainability IndexNorth America, and received a perfect score of 100 percent on the 2017 Corporate Equality Index. Learn more at: Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for alerts at About Versta Research Versta Research is a full-service market research firm, headquartered in Chicago, IL, specializing in customized strategic market research and public opinion polling. Learn more at: 48

49 2017 Long-Term Care Thought Leadership Research Part II: Caregiving Lincoln Financial Group and Versta Research October 2017 Insurance products issued by: The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value 2018 Lincoln National Corporation

50 Contents Research Methods...51 Consumers...52 Long-Term Care Planning...53 Experience with Long-Term Caregiving...62 Paying for Long-Term Care and Long-Term Care Insurance...65 Appendix...67 Page 50

51 Research Methods Versta Research, a third-party research firm, was commissioned by Lincoln Financial Group to design and conduct two surveys one among consumers and one among producing financial advisors on the topic of long-term care attitudes, experiences, and planning. Consumer Survey Sample of 1,012 U.S. adults Recruited from a national online research panel used exclusively for polling and research Sample was stratified by age, gender, sexual orientation, race and ethnicity, region, and income Final data was weighted to match U.S. Census on age, gender, race, ethnicity, and region Advisor Survey: Sample of 500 producing financial advisors Recruited from a national online business panel used exclusively for research To qualify for the survey, advisors had to have familiarity with long-term care or hybrid products, minimum 5 years tenure as an advisor, and a minimum average client portfolio of $100,000 Advisors represent a full range of channels, including independent broker dealers, wirehouses, regional and insurance broker dealers, banks, and others The surveys were conducted from August 28 to September 22,

52 CONSUMERS 52

53 Consumer Survey Attitudes Long-Term Toward Care Long-Term PlanningCare 53

54 Many worry about the potential burden on children and spouses. Attitudes toward Children and Spouses Providing Long-Term Care 28% disagree 72% agree Would feel reluctant to ask child 11% 18% 42% 30% 32% disagree 68% agree Children should not be burdened 9% 22% 44% 24% 42% disagree 58% agree Would feel embarrassed having child provide 16% 26% 33% 24% 56% disagree 44% agree Spouses should not be burdened 21% 35% 33% 11% Disagree strongly Disagree somewhat Agree somewhat Agree strongly Q21. How much do you agree or disagree with each of the following statements: a. If I needed long-term care I would feel reluctant to ask my children to do it (802n); b. I would feel embarrassed having my children provide long-term care for me (807n); c. Children should not be burdened with having to provide long-term care for parents (1,012n); d. Spouses should not be burdened with having to provide long-term care for each other? (1,012n) 54

55 Four out of ten say one of their biggest fears of needing long-term care is being a burden on children or a spouse. Fears Related to Long-Term Care (multiple select) Losing my mental abilities Losing my physical abilities 69% 69% Losing my independence 64% Running out of money Receiving low quality care 50% 52% Not being able to afford help 45% Being a burden on my children Being a burden on my spouse 41% 39% Moving to a nursing home Just needing help with these types of activities 32% 35% Losing my home 27% Q22. What are your biggest fears, if any, about needing long-term care someday? (1,012n) 55

56 Twice as many worry about being a burden if they need long-term care than about depleting savings. Which do you worry about more? 65% 35% Being a burden on others Depleting savings Q35. Which do you worry about more: Being a burden on others if you need long-term care; Depleting your savings if you need long-term care? (1,012n) 56

57 Half would want to hire professional care specifically to relieve the burden on children or a spouse. Advantages of Professional Long-Term Care Help (multiple select) The person needing care might be able to live at home 65% The person would get more experienced care 56% It would relieve the burden on children 52% It would relieve the burden on a spouse 51% Q23a. How valuable would it be for you to have hired professional help (like a home health aide) if: You needed long-term care? Q24. [IF VALUABLE] What would be valuable about having hired professional help for long-term care: The person needing care might be able to live at home; The person would get care from more experienced people; It would relieve the burden on children; It would relieve the burden on a spouse; Something else? (1,012n) 57

58 Most also worry about becoming caregivers and about not being able to provide adequate care. 27% disagree 73% agree I know the responsibility of caregiving would fall to me 6% 21% 45% 28% I worry I wouldn't provide adequate care if somebody in my family needed it 28% disagree 9% 20% 44% disagree 48% 56% agree 72% agree 23% I hope I don t become a caregiver for my parents 18% 26% 36% 20% I worry about becoming a caregiver for somebody in my family 16% 45% disagree 29% 40% 55% agree 16% Disagree strongly Disagree somewhat Agree somewhat Agree strongly Q32. How much do you agree or disagree with each of the following statements: a. I worry about having to become a caregiver for somebody in my family (906n); b. I know that the responsibility of caregiving in my family would fall to me (859n); c. I hope I don t end up being a caregiver for my parents (679n)? Q34a. How much do you agree or disagree with each of the following statements: I worry that I would not be able to provide adequate care if somebody in my family needed it? (908n) 58

59 Americans surveyed acknowledge that the burden of long-term caregiving falls more on women than on men. 25% disagree 75% agree Men should offer to help more with long-term care 6% 20% 55% 19% 35% disagree 65% agree Parents expect more help with long-term care from daughters 10% 25% 45% 21% 37% disagree 63% agree Women are better at providing long-term care 10% 27% 48% 15% Disagree strongly Disagree somewhat Agree somewhat Agree strongly Q32. How much do you agree or disagree with each of the following statements: d. Women are better at providing long-term care than men; e. Men should offer to help more with long-term care than they do; f. Parents expect more help with long-term care from daughters than from sons? (1,012n) 59

60 Women, especially, believe the responsibility of caregiving will fall on them. Men Women I know the responsibility of caregiving would fall to me 31% 69% 22% 78%* Parents expect more help with long-term care from daughters 46% 54% 24% 76%* I hope I don t become a caregiver for my parents 39% 61%* 49% 51% Disagree Agree * Significantly higher Q32. How much do you agree or disagree with each of the following statements? (male n; female n) 60

61 Four in ten have never really thought about what a longterm caregiver does. Haven t Thought about a Long-Term Caregiver s Responsibilities Understanding about What Care Involves (when presented with definition) 44% agree 10% 34% Agree strongly Agree somewhat 20% Involves more than expected Involves exactly what expected 56% disagree 33% 23% Disagree somewhat Disagree strongly 74% 4% 3% Involves less than expected Had no idea what long-term care was Definition of long-term care: People are recognized as needing long-term care when they require substantial supervision to protect themselves from threats to health and safety caused by severe cognitive impairment, or if they need assistance with at least two out of six Activities of Daily Living (ADLs). The six ADLs are generally recognized as: Bathing: The ability to clean oneself and perform grooming activities like shaving and brushing teeth. Dressing: The ability to get dressed by oneself without struggling with buttons and zippers. Eating: The ability to feed oneself. Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again. Toileting: The ability to get on and off the toilet. Continence: The ability to control one's bladder and bowel functions. Q33. How does this description of long-term care align with what you thought before this survey: Providing long-term care involves more than I thought; Providing long-term care involves exactly what I thought; Providing long-term care involves less than I thought; I had no idea what long-term care was? Q34b. How much do you agree or disagree with each of the following statements: I ve never really thought about all of the things that a long-term caregiver has to do? (1,012n) 61

62 Consumer Survey Experience with Long-Term Caregiving 62

63 Most have seen what providing long-term care involves, either as caregivers themselves, or through others. Personal Experience with Long-Term Care Have Known Someone Who Had a Difficult Experience Being a Caregiver 44% Neither 22% Has provided care 63% agree 23% 40% Agree strongly Agree somewhat 34% Close friend or family member has provided care 37% disagree 21% 16% Disagree somewhat Disagree strongly Q47. Have you ever provided long-term care for a family member or friend? Q49. [IF NO] Do you have a close family member or friend who has provided long-term care for someone close to them? Q32g. How much do you agree or disagree with each of the following statements: I ve known someone who had a difficult experience being a caregiver? (1,012n) 63

64 Despite the difficulty, most caregivers are glad to help, though insurance would make it easier. 6% disagree 94% agree I am glad I was able to help by providing care 1% 5% 36% 57% 37% disagree 63% agree Long-term care insurance would have made my role easier 14% 23% 37% disagree 41% 63% agree 23% I had no idea how demanding it would be 12% 25% 35% 27% Caregiver experience changed how I am planning for my future 47% no 53% yes Disagree strongly Disagree somewhat Agree somewhat Agree strongly Q50. [IF EVER PROVIDED LONG-TERM CARE] How much do you agree or disagree with each of the following statements: a. I had no idea how demanding long-term care would be until I provided it myself; c. I am glad I was able to help by providing long-term care; d. Long-term care insurance would have made my role easier? Q51. [IF EVER PROVIDED LONG-TERM CARE] Did your experience as a caregiver change how you are planning for your own future? (226n) 64

65 Consumer Survey Paying for Long-Term Care and Long-Term Care Insurance 65

66 The most frequent trigger for exploring long-term care insurance is age. Reasons for Looking into Long-Term Care Insurance (multiple select) My age Having someone close to me need long-term care Having it offered as a work benefit Having enough income to afford it 25% 25% 25% 40% Shopping for Insurance Age 50 Age at which people who own or looked into long-term care insurance began shopping for it. Advice from an advisor Seeing somebody else become a long-term caregiver Advice from family or friends Retiring from a job 19% 18% 16% 12% Age 50 Age at which people who are interested in purchasing a long-term care policy someday would begin to shop for it. Becoming a long-term caregiver myself 11% Something else 4% Q41. [IF HAS LTC POLICY, OR HAS LOOKED INTO IT] What first prompted you to look into long-term care insurance? (272n) Q40. [IF NO LTC POLICY, BUT INTERESTED IN PURCHASING IT SOMEDAY] At what age do you think you would begin to shop for long-term care insurance? [median] (380n) Q42. [IF HAS LTC POLICY, OR HAS LOOKED INTO IT] At what age did you begin shopping for long-term care insurance? [median] (261n) 66

67 APPENDIX 67

68 Selected Consumer Data by Gender ALL MEN WOMEN Q21a. Would feel reluctant to ask child to provide long-term care 72% 75% 69% Q21b. Would feel embarrassed having child provide long-term care 58% 61% 54% Q21c. Children should not be burdened by providing long-term care 68% 71% 65% Q21d. Spouses should not be burdened with providing long-term care 44% 48% 41% Q22: Biggest fear of needing long-term care: Being a burden on my children 41% 38% 44% Q22: Biggest fear of needing long-term care: Being a burden on my spouse 39% 42% 36% Q22: Biggest fear of needing long-term care: Just needing help with these types of activities 32% 28% 35% Q22: Biggest fear of needing long-term care: Losing my home 27% 22% 31% Q22: Biggest fear of needing long-term care: Losing my independence 64% 57% 72% Q22: Biggest fear of needing long-term care: Losing my mental abilities 69% 65% 73% Q22: Biggest fear of needing long-term care: Losing my physical abilities 69% 66% 72% Q22: Biggest fear of needing long-term care: Moving to a nursing home 35% 32% 38% Q22: Biggest fear of needing long-term care: Not being able to afford help 45% 37% 53% Q22: Biggest fear of needing long-term care: Receiving low quality care 50% 42% 58% Q22: Biggest fear of needing long-term care: Running out of money 52% 48% 56% Q24. Value of professional long-term care help: It would relieve the burden on a spouse 51% 53% 50% Q24. Value of professional long-term care help: It would relieve the burden on children 52% 46% 57% Q24. Value of professional long-term care help: The person needing care might be able to live at home 65% 59% 70% Q24. Value of professional long-term care help: The person would get more experienced care 56% 56% 56% 68

69 Selected Consumer Data by Gender ALL MEN WOMEN Q25. Biggest perceived burdens: The emotional burden of providing care 72% 70% 75% Q25. Biggest perceived burdens: The financial burden of cost 56% 54% 58% Q25. Biggest perceived burdens: The financial burden of lost earnings 35% 32% 37% Q25. Biggest perceived burdens: The health consequences of stress 51% 44% 58% Q25. Biggest perceived burdens: The physical burden and difficulty of care 64% 61% 67% Q25. Biggest perceived burdens: The time burden of providing long-term care 64% 63% 64% Q32a. I worry about becoming a caregiver for somebody in my family 55% 55% 55% Q32b. I know the responsibility of caregiving would fall to me 73% 69% 78% Q32c. I hope I don t become a caregiver for my parents 56% 61% 51% Q32d. Women are better at providing long-term care 63% 62% 64% Q32e. Men should offer to help more with long-term care 75% 75% 74% Q32f. Parents expect more help with long-term care from daughters 65% 54% 76% Q32g. Have known someone who had a difficult experience being a caregiver 63% 62% 64% Q33. Response to description of long-term care: Involves more than expected 20% 23% 17% Q34a. I worry I wouldn't provide adequate care if somebody in my family needed it 72% 72% 70% Q34b. Haven't thought about a long-term caregiver's responsibilities 44% 49% 39% Q35. Worry more about: Being a burden on others if you need long-term care 65% 67% 64% Q35. Worry more about: Depleting your savings if you need long-term care 35% 33% 36% 69

70 Selected Consumer Data by Gender ALL MEN WOMEN Q41. Reasons for looking into long-term care insurance: Advice from an advisor 19% 21% 16% Q41. Reasons for looking into long-term care insurance: Advice from family or friends 16% 13% 20% Q41. Reasons for looking into long-term care insurance: Becoming a long-term caregiver myself 11% 6% 17% Q41. Reasons for looking into long-term care insurance: Having enough income to afford it 25% 22% 28% Q41. Reasons for looking into long-term care insurance: Having it offered as a work benefit 25% 24% 26% Q41. Reasons for looking into long-term care insurance: Having someone close to me need this care 25% 21% 30% Q41. Reasons for looking into long-term care insurance: My age 40% 47% 31% Q41. Reasons for looking into long-term care insurance: Retiring from a job 12% 14% 9% Q41. Reasons for looking into long-term care insurance: Seeing somebody else become a caregiver 18% 17% 19% Q48a. Burdens experienced by caregivers: The emotional burden of providing care 84% 79% 86% Q48b. Burdens experienced by caregivers: The physical burden and difficulty of care 62% 56% 67% Q48c. Burdens experienced by caregivers: The health consequences of stress 46% 40% 51% Q48d. Burdens experienced by caregivers: The time burden of providing long-term care 72% 72% 71% Q48e. Burdens experienced by caregivers: The financial burden of lost earnings 39% 40% 38% Q48f. Burdens experienced by caregivers: The financial burden of cost 40% 44% 37% Q50a. Has provided long-term care: I had no idea how demanding it would be 63% 58% 66% Q50c. Has provided long-term care: I am glad I was able to help by providing care 94% 89% 97% Q50d. Has provided long-term care: Long-term care insurance would have made my role easier 63% 66% 62% Q51. Has provided long-term care: Caregiver experience changed how I am planning for my future 53% 49% 55% 70

71 Demographics of Consumer Sample (1,012n) (weighted) AGE Millennials (After 1980) 32% Gen X ( ) 27% Boomers ( ) 29% Silent ( ) 12% GENDER Male 48% Female 51% Transgender <1% Do not identify as any of the above <1% SEXUAL ORIENTATION Heterosexual 94% Bisexual 3% Gay 2% Lesbian 1% MARITAL STATUS Married 54% Never married 28% Widowed 5% Divorced 11% Separated 1% RACE/ETHNICITY White/Caucasian 65% Hispanic 15% Black/African American 12% Asian or Pacific Islander 6% Native American or Alaskan Native 1% Mixed racial background 2% Another racial or ethnic category <1% REGION Northeast 18% Midwest 21% South 37% West 23% CHILDREN (including adult children) Yes 61% No 39% EMPLOYMENT Employed 62% Not employed 6% Retired 25% Student 2% Stay-at-home spouse or partner 4% HOUSING Own 68% Rent 27% Neither 5% HOUSEHOLD INCOME Less than $25,000 14% $25,000 to $49,999 22% $50,000 to $74,999 19% $75,000 to $99,999 14% $100,000 to $149,999 17% $150,000 to $199,999 7% $200,000 or more 7% INVESTABLE ASSETS Less than $25,000 24% $25,000 to less than $50,000 17% $50,000 to less than $100,000 15% $100,000 to less than $250,000 14% $250,000 to less than $500,000 11% $500,000 to less than $1 million 10% $1 million to less than $2 million 5% $2 million or more 4% 71

72 Profile of Advisor Sample (500n) BUSINESS MIX Investment-focused 59% Balanced 28% Insurance-focused 13% COMPENSATION MODEL Asset management fees 50% Commissions (insurance & brokerage) 45% Planning fees 5% NUMBER OF CLIENTS <100 23% % % % 751 1,000 3% More than 1,000 3% AUM Less than $1M 1% $1M to <$5M 5% $5M to <$25M 18% $25M to <$50M 21% $50M to <$100M 21% $100M to <$250M 20% $250M to <$500M 8% $500M to <$1b 3% $1b or more 2% PRACTICE STYLE Sole practitioner with staff 39% Team-based practice (3+ members) 34% Sole practitioner with no staff 27% CHANNEL Independent BD 45% Wirehouse 13% Regional BD 12% Insurance BD 8% Bank 6% Insurance Carrier 6% MGA/BGA 1% RIA (vol.) 8% Other 1% GENDER Male 81% Female 19% AGE % % % % % 75+ 2% 72

73 LincolnFinancial.com About Lincoln Financial Group Lincoln Financial Group provides advice and solutions that help empower people to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $246 billion in assets under management as of September 30, Lincoln is a committed corporate citizen and was named one of the Forbes Best Employers for 2017, is a member of the Dow Jones Sustainability IndexNorth America, and received a perfect score of 100 percent on the 2017 Corporate Equality Index. Learn more at: Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for alerts at About Versta Research Versta Research is a full-service market research firm, headquartered in Chicago, IL, specializing in customized strategic market research and public opinion polling. Learn more at: LCN