Boca Raton, Florida (PRWEB) August 27, 2013
New data from LTC Tree, a long term care insurance "supermarket," indicates the average buyer of LTC coverage is younger than ever before. A new report from the firm investigates several reasons why 50 may be the new 65 when it comes to retirement planning. LTC Tree’s statistical department analyzed more than 53,000 cases from 1999 to 2013 to find the mean change in the buyer’s age. The findings show an emerging trend.
In a society where life expectancy is increasing, why are people buying long term care insurance earlier?
As of June 2013, the average buyer of long term care insurance is aged 53.1. This represents the youngest average age in the history of the company. Drew Nichols, President of LTC Tree, explains that a number of different factors have led to this emerging trend. Stricter underwriting guidelines are resulting in an increase in younger, healthier buyers in their 40s and 50s who are much more likely to be approved than someone in their 60s or 70s. Medications and chronic conditions only worsen acceptance chance, and the likelihood of those two things increases with age. While the new underwriting standards certainly have an impact on the declining age of buyers, LTC Tree’s analytic department uncovered another major influencing factor.
These younger buyers are seeing their parents develop conditions that lead to long term care services, so naturally, they are learning first hand how important it is to buy this type of insurance early.
Marketing & Internet
Just a decade ago, long term care planning and marketing was mostly relegated to the silver-haired crowd aged 60+. Insurance companies targeted people aged 60 to 80 as prime candidates for long term care policies for a multitude of reasons. Older clients would be more sympathetic to the need, for one thing. Today, however, retirement planning starts at younger ages as savvy baby boomers seek to establish well defined retirement plans that their longevity won't outlast decades ahead of time.
In addition, increasingly inquisitive (and younger) baby boomers are using the Internet to research (and ultimately purchase) long term care insurance. In the old days, a local agent may give a free dinner seminar and then come out to the house for that infamous insurance sales meeting. The meeting was a dog and pony show about a policy that culminated in the client writing a big check to put coverage in force without knowing any alternatives. LTC Tree's data is based on Internet buyers, so the cohort tends to be savvier, younger, and healthier, according to Nichols.
Insurance Company Rules
As time went on and more claims data came in, the insurers noticed that they preferred younger clients with a longer "runway" of premiums on average. The maximum age for purchase came down from 84 to 79 to 75 with most long term care companies over the years. The LTC Tree study also found that decline rates for those ages 65+ are 220% higher than decline rates for those ages 45-55. One theory is that so- called "adverse selection" would be higher with older buyers than with younger, healthier buyers.
LTC Tree’s report provides new insight into the long term care industry and what affects buyers’ purchasing decisions. As these younger, savvier boomers watch their parents receive long term care services, they are beginning to realize the importance of insuring their own long term health.