Understanding consumer attitudes & awareness JOHN HANCOCK 2015 LONG-TERM CARE SURVEY RESULTS & INSIGHTS LTC-7100 11/15 For professional use only. Not for use with the public.
As more and more Baby Boomers prepare for retirement they are faced with a number of challenges. They may be assuming care for elderly family members, while being responsible for raising families of their own. The rising cost of health care may be a concern, as they consider a time when their own health may be in decline. And, even if they have ample savings and investments, the prospect of outliving their savings may have crossed their minds, especially if they have dealt with a long-term care situation first hand. John Hancock was interested to learn whether consumers awareness of long-term care issues has increased and whether they ve considered how the potential need for long-term care can be addressed in their financial planning.
Executive Summary John Hancock has been conducting long-term care surveys since 1996, in an effort to gauge consumers attitudes and awareness concerning long-term care issues and long-term care insurance. This year s survey focused primarily on the Baby Boomers, who continue to move toward retirement, and a time in their lives when the prospect for needing care themselves becomes more real. Not surprisingly, the survey revealed that many Baby Boomers find themselves with first-hand long-term care experience as they deal with their aging parents. This experience has increased their awareness of many of the issues that surround long-term care and nearly two-thirds of them expect that they will need long-term care at some point in the future. However, the majority does not yet have a formal plan in place. This survey will help provide you with insights into the consumer mind-set and help you to identify those individuals that are the strongest potential long-term care insurance purchasers. 65% OF BABY BOOMERS EXPECT THAT THEY WILL NEED LONG-TERM CARE AT SOME POINT IN THE FUTURE. MANY BABY BOOMERS FIND THEMSELVES WITH FIRST-HAND LONG-TERM CARE EXPERIENCE AS THEY DEAL WITH THEIR AGING PARENTS. 1
Survey findings to determine awareness Baby Boomers may not know as much about long-term care as they think they do, even though nearly half have had direct experience. Although they recognize the impact that the need for care can have, many have not yet planned for the possibility. 60% 60% incorrectly disagreed with the fact that 40% of the long-term care population is under age 65. The need for care can arise at any time, even at the younger ages, due to an accident or illness. 73% 73% thought the annual cost of nursing home care averages $50,000. The 2013 John Hancock Cost of Care study revealed it to actually be $94,200. The need for long-term care was identified as the top possible risk to their physical and financial well-being in retirement (65%). Not being able to afford health care (50%) and running out of money (42%) rounded out the top three concerns. 91% are concerned that having a loved one provide their care would be placing too great a burden on that person. But Baby Boomers still envision their care being provided by a spouse (58%), a daughter (15%), a professional caregiver or nurse (13%), a son (8%), or a friend (1%). Although the potential need for longterm care is a significant concern among Baby Boomers, planning lags behind. Only 44% of pre-retiree Boomers and 59% of retired Boomers have a formal plan, indicating that planning is more likely to happen as retirement nears. 2
About 4 in 10 Baby Boomers believe they have long-term care coverage; most may be mistaken. We know from industry data that the actual number of Baby Boomers covered for LTC is much lower than 4 in 10 (40%). People mistakenly believe they will be covered by another plan, when in fact they will not. The survey finding supports the importance of educating consumers on the limited options they have to pay for their care, should they need it. 59% of Baby Boomers interested in purchasing long-term care insurance preferred a comprehensive stand-alone policy. 41% of these Baby Boomers would opt for a rider on life insurance. The ability to afford the best quality of care is the top consideration for the purchase of coverage (22%), followed by having more choices about where care is received (16%). 44% 64% Of those survey respondents who were identified as more likely to purchase long-term care insurance, 44% had a family member who needed long-term care. In comparison, the 28% of respondents who were viewed as less likely to purchase longterm care insurance do not have the same first-hand experiences. 64% of likely buyers felt it was important to plan ahead for a potential long-term care scenario. 39% of respondents who were less likely to purchase long-term care coverage thought it is very important to make sure you can afford care. 3
Determining your customer s level of interest in LTC coverage Although many of your clients may agree that long-term care insurance is a wise purchase, not all of them will follow through and apply for coverage. It will help to identify those prospects who see themselves in need of coverage and therefore are the most likely to buy a policy. The following questions will help you determine where your clients are in their overall financial planning process. As a general rule, the more formal the financial plan they have in place, the more likely they are to consider the purchase of long-term care insurance. Client Assessment Tool Ask your clients the following questions and insert the number of points most closely related to their answer. 0 POINTS 1 POINT 2 POINTS 3 POINTS Your client has not thought about it at all Your client has only thought about it a little Your client has thought about it and has an idea of what to do Your client already has a plan in place PLANNING FOR THE FUTURE ANSWERS (# OF POINTS) 1 Have you purchased adequate life insurance to cover your family needs? 2 Have you calculated the best time to claim Social Security? 3 Have you calculated how much money you can afford to spend each month during retirement? 4 Have you decided where you would like to live in retirement? 5 How do you plan to pay for long-term care for you or your spouse/partner if the need arises? 6 Have you estimated your health care costs during retirement? 7 Have you decided how much financial support or inheritance you would like to provide to your children, grandchildren, or other family members? 8 Have you developed a formal written or electronic financial or retirement plan? 9 Have you calculated the amount of money you would have needed to save for retirement? TOTAL POINTS 4
ICC14-LTC-5600 1/15 Performance LTC Long-Term Care Insurance Tailor your message to meet individual client needs Clients who have a financial plan in place that addresses the topics covered in the questionnaire or who have been actively thinking about retirement may be excellent prospects for long-term care insurance. Those clients who are not as future-oriented, may be more challenging. Providing your clients with the right information will depend on where they are in terms of likelihood of purchase. TOTAL NUMBER OF POINTS These clients may appreciate learning how long-term care insurance can complement their financial planning. 27 Learn more with the Performance LTC Product Brochure available on www.jhltc.com John Hancock Life Insurance Company (U.S.A.) Long-term care insurance with a difference These clients may need to discuss how they would fund a potential long-term care event, given the costs. 18 Learn more with the LTC Needs Overview Brochure available on www.jhltc.com These clients may need to understand more about how a long-term care event can impact their family members. 9 Learn more with the LTC Quiz Brochure available on www.jhltc.com These clients may need additional education about long-term care issues to help them focus on the future. 0 Learn more with the NAIC Shopper s Guide available on www.jhltc.com A Shopper s Guide to Long-Term Care Insurance 5
Starting the conversation It is encouraging to note that more than half of those respondents without a plan would be interested in talking to their advisor about long-term care insurance, with two-thirds saying they would appreciate their advisor initiating a conversation. We believe this represents an enormous opportunity for financial professionals who are able to articulate the issues and explain how long-term care insurance is an essential element in any comprehensive financial plan. Here are some talking points you can use to underscore the importance of planning. Achieving retirement goals requires growing and protecting your assets It is estimated that 70% of people over the age of 65 will require some period of ongoing assistance at some point in their lives (U.S. Department of Health and Human Services, National Clearinghouse for Long-Term Care Information, www.longtermcare.gov, April 2014). Many people think they re already covered but any health or disability insurance you may have in place may not cover your potential long-term care needs Some people believe they can rely on government programs like Medicare or Medicaid, but those programs carry stringent requirements and may not address your particular situation Your family members may not be available to tend to your day-to-day needs and you may not want their assistance with some of the more personal aspects of your care Long-term care insurance represents a cost-effective approach that can help protect you and your family members from the high cost of care and may give you more options about your care, should the need ever arise The cost can be more than many individuals can afford or would be willing to pay out-of-pocket. John Hancock s 2013 Cost of Care Survey revealed that the national annual average for: A PRIVATE ROOM IN A NURSING HOME CAN RUN MORE THAN $94,200 OR $258 A DAY AN ASSISTED LIVING FACILITY IS APPROXIMATELY $41,000 OR AROUND $3,400 A MONTH HOME CARE FOR SIX HOURS PER DAY, FIVE DAYS A WEEK IS ABOUT $29,600 CARE NEEDED AROUND THE CLOCK CAN COST MORE THAN NURSING HOME CARE TWO-THIRDS OF BABY BOOMERS SAY THEY WOULD APPRECIATE IF THEIR ADVISOR WOULD INITIATE A CONVERSATION ABOUT LONG-TERM CARE. 6
Planning ahead for the product solution Once you ve been able to establish the important role long-term care insurance can play in any comprehensive financial plan, your customers may wish to learn more about their product options. John Hancock s Performance Long-Term Care Insurance may be the right product to meet their needs. Performance LTC is a ground-breaking product that combines the broad coverage offered by traditional long-term care insurance, while giving consumers greater control over their premiums and benefits. Performance LTC covers care received in a wide range of settings, from nursing homes or assisted living facilities to the familiar comforts of home. FLEX CREDITS 1 Performance LTC also offers a unique feature Flex Credits which are calculated according to a formula that takes into consideration the company s insurance and investment experience. When experience is positive, Flex Credits can accrue over time and be applied in the following ways: To reduce policy premiums To pay for services that can help an individual remain at home for as long as possible 2 To reimburse LTC expenses during the Elimination Period, instead of those expenses being paid out-of-pocket TO LEARN MORE REVIEW THE PERFORMANCE LTC PRODUCER GUIDE OR FACTS-AT-A-GLANCE To reimburse LTC expenses in excess of the long-term care insurance benefit amount To provide a refund of premium upon death or surrender 3 Performance LTC offers your clients greater transparency than any other LTC insurance product, giving clients the ability to make decisions about their coverage so that it can evolve with their needs. It may be exactly the coverage they need to complement their financial planning strategy. 1. Flex Credits are not guaranteed and are calculated according to a formula that takes into consideration the company s insurance and investment experience. John Hancock s calculation method is described in the policy and is on file with the applicable regulator. Negative Flex Credits will not decrease the Flex Account, but will be carried forward until they are offset by positive Flex Credits. For example, if the current year s Flex Credit is a negative $1,000 and the following year s Flex Credit is a positive $1,200, your client will receive no Flex Credit for the current year and a Flex Credit of $200 the following year. Please note that the payment of any Flex Account balance may have Federal Income Tax implications. You clients are advised to review this benefit with a qualified tax professional or attorney to determine any such tax impact. 2. Eligible services are limited to: Home Modifications, Emergency Medical Response Systems, Durable Medical Equipment, CaregiverTraining, Home Safety Check, and Provider Care Check. 3. The Flex Account payable upon death or lapse is capped at total premiums paid. 7
Conclusion The results of the 2015 John Hancock Survey underscore the need to educate your clients about the issues and position long-term care insurance as a preferable alternative to paying for care out of pocket, relying on government programs or counting on family members for care. Long-term care insurance can help: preserve savings and income maintain control about where care is received provide the ability to afford higher quality or greater frequency of care reduce dependence on government programs like Medicaid and Medicare IF YOUR CLIENTS EVER NEED CARE, THE PURCHASE OF LONG-TERM CARE INSURANCE MAY BE THE BEST DECISION THEY EVER MAKE. relieve loved ones from the responsibility of caregiving Once you determine that your client is a serious candidate for the coverage, by assessing his or her penchant for planning, you can position the need for long-term care as a potential risk to overall financial well-being. Then you can introduce long-term care insurance as an easy way to mitigate that risk. 8
METHODOLOGY This online survey was developed and conducted by Greenwald and Associates. Information was gathered through brief interviews with 1,003 Baby Boomers between the ages of 50 and 68. Your clients may share many of their characteristics. Respondents were affluent, with those working having household incomes of at least $100,000 and assets of at least $150,000 and those retired having investible assets of at least $500,000. They were also well-educated with 78% holding a Bachelor s or advanced degree. A large majority (87%) were married and just over three quarters had children. Questions covered included long-term care planning and general knowledge about long-term care issues and views about long-term care insurance coverage. B
OUR MISSION John Hancock Insurance empowers people to feel confident about the future by helping them protect their loved ones, grow their savings, and preserve their wealth. It s why we re committed to offering innovative products and services that meet real customer needs and reinforce the trust in John Hancock that our clients have valued for more than 150 years. Long-term care insurance is underwritten by John Hancock Life Insurance Company (U.S.A.), Boston, MA 02117 (not licensed in New York) and in New York by John Hancock Life & Health Insurance Company, Boston, MA 02117. Insurance policies and/or associated riders and features may not be available in all states. This material is for Institutional/Broker-Dealer use only. Not for distribution or use with the public. MLI102815153 10