The Case For Selling LTC Insurance To Boomers

For advisors and agents, the message is clear: Boomers need to begin thinking about, and planning financially for, their own and their spouse's long term care. This means discussing the pros and cons of various types of care (such as home-based, assisted-living or nursing home). It also means developing a financial plan to fund the costs associated with long term care.

Financial considerations

Factoring LTC costs into your clients' post-retirement budget and expenses is a critical yet often overlooked step in retirement planning. Wealth preservation is a major goal for most retirees. And, for clients who don't have LTC insurance, the cost of care is one of the biggest unprotected retirement risks.

According to the MetLife Market Survey of Nursing Home & Home Care Costs, released in 2006, the national average daily rate for a private room in a nursing home is $206, or $75,190 annually, while the national average daily rate for a semi-private room in a nursing home is $183, or $66,795 annually. Most Americans cannot afford this kind of care without financial assistance.

Nonfinancial considerations

Yet the value of LTC insurance goes beyond financial considerations. Most retirees want to know that they will be able to continue to live independently, even if they eventually need long term care. For boomers, this desire is particularly acute. Well-known as freedom-seekers, today's boomers want above all to maintain their independent lifestyles. In keeping with this desire, most boomers plan to continue living in their own homes during retirement, assuming health or caregiving issues do not preclude them from doing so. Another Institute study, The Future of Retirement Living, found that 86% of pre-retirees who currently live in their own homes would like to continue living there during retirement–a and 49% hope to remain in their homes, even if they begin to need day-to-day assistance or continuing care during retirement.

Insurance can equal independence

To turn this hope into a reality, boomers will need to plan for the possibility that they may someday experience a long term care illness and need assistance. While loved ones may be available to provide support, boomers may also need services from paid caregivers. Depending upon the level of care required, they may need either a large nest egg or an LTC insurance policy to pay for the care services that will allow them to remain at home.

The National Alliance for Caregiving and the AARP estimate that 44 million Americans, or 21% of all U.S. households, provide care for an adult family member or friend age 18 and older. While caregiving can be rewarding, it can also be emotionally, physically and financially exhausting.

LTC insurance can provide boomers with the peace of mind needed to remain independent and in their own homes for as long as possible, without needing to rely on family members or loved ones. Some LTC policies will even reimburse family members if they provide in-home care.

While few boomers want to think about growing old and being physically disabled, most worry about the risks associated with long term care costs. Advisors and insurance agents who help boomers protect against these risks will lay the foundation for a strong retirement plan-one grounded in preparation, independence and peace of mind.

Dr. Sandra Timmerman is director of the MetLife Mature Market Institute, Westport, Conn., a subsidiary of MetLife Inc. She can be reached at [email protected]