What most people don’t know about private long term care insurance – part 1

There are many misconceptions about the private long-term care insurance market. In this two-part series, we’ll be highlighting a few key areas that are often overlooked or misunderstood in our industry.

Long-term care has significant market potential.
There is significant untapped market potential in long-term care, even considering only those who are eligible for coverage based both on health and affordability. While the most common objection to the purchase is cost, the reality is that many more people do have adequate financial means to afford coverage but they don’t perceive its value relative to the price. Or they don’t really know what coverage will or can cost or how to tailor suitable coverage to their price point.

One analysis identifies an untapped market potential among all adults as roughly 51 million individuals (49%) out of the 110 million adults age 45 and older. Certainly, factoring in risk preferences and competing financial priorities, many of those income- and health-eligible individuals will never be convinced that long-term care insurance makes sense for them. Or it may not be suitable for them for specific reasons. But the gap between the currently roughly 8 million insured and that 49% number is still huge. As a result, there is still a great deal of education and awareness that needs to take place in our industry.

Consumers are typically very satisfied with this coverage.
While the media focuses on anecdotal stories of individuals who experience claim denial or challenges obtaining benefits, the actual industry experience and consumer satisfaction based on representative survey analyses tells a very different and favorable picture. Claim rejection rates are very low; about 95% of requested claims are paid. And over 90% of claimants reported having no disagreement with their insurer with regard to the nature and status of their claim – including both approved and denied claims.

Roughly 80% of individuals on claim report being “very satisfied” with the care they are receiving. Satisfaction is higher when a care manager is working with the claimant and their family to help organize and obtain services. A care manager is an integral component of most private long-term care insurance plans and works positively with individuals and their families to maximize independence, care access and recovery while also stretching coverage dollars. Another study found that 80% to 89% of claimants say that having insurance makes it easier for them to obtain needed services. Having coverage also provides greater flexibility in making care choices and easing the burden on informal caregivers.

There is highly-effective emphasis on care at home. Some people still think of nursing homes when they hear the words “long-term care.” The ability to get care at home, potentially recover, and to support and meet the needs of informal caregivers is significantly improved for those who have private long-term care insurance. The chart below shows the greater use of care in less restrictive settings for those with long-term care insurance compared with disabled individuals who do not have coverage.