How will the economic downturn affect the long-term care insurance business?
Recently, advisors have been asking this exact question, as have most people regardless of their profession. Many can't help but recall the 1991 national recession and how it affected business.
However, if we do see similar business conditions to 1991 there is a strong chance it may actually enhance the LTCI business. Why? Because people will be in a "circle the wagons" frame of mind – and insurance protection products like LTCI can help alleviate those fears.
Much of today's consumer climate is driven by fear instead of the true underlying fundamentals. The emerging national viewpoint – that everything is going south quickly – is not supported by hard economic facts. Because of this, there is no doubt that many people will stay employed and have the ability to afford LTCI premiums.
Compounding the fear factor is the reality that both the stock market and home values fell this year. According to an article in the Wall Street Journal "the double dip, affecting asset owners of every age bracket, is unprecedented in recent decades." People who just a few months ago assumed (and were told by many of their trusted advisors) they could comfortably self-insure their long-term care needs suddenly feel very vulnerable.
