Long-Term-Care Insurance MacroMonitor Marketing Report Vol. III, No. 12 November 1998

At some point in each of our lives, nearly half of us will require long-term-care assistance—that is, we will need ongoing nursing care either at home or in an institutional setting after the age of 65. The cost for this care can be staggering, and unless consumers are informed and plan now, no matter their life stage, for their long-term care, they face the possibility of wiping out their life savings.

This MacroMonitor Marketing Report focuses on the target populations for this type of insurance and the importance of long-term-care insurance as part of every household's financial portfolio. Without long-term-care insurance, aging Baby Boomers could wipe out their life savings or become a financial burden to their families. Long-term care may be a very depressing subject, but consumers should know that the probability of using long-term care insurance (that is, of filing a claim) is greater than the probability of using homeowners or automobile insurance.

The U.S. Census Bureau projects that the population age 65 and older will increase from 39 million in 2010 to 69 million in 2030, when the surviving Baby Boomers become age 65 and older. By 2030, some 20 percent of the total population will be older than 65, compared to about 13 percent now. The most rapidly growing age group will be 85 and older, doubling in size by 2030, and increasing fivefold by the year 2050.

Population Age 65 and Older

With the inevitable graying of the American population, and the spread of AIDS (acquired immune deficiency syndrome), strokes, and other diseases, along with growing awareness of the needs for the nonelderly disabled, financial institutions are likely to find an expanding market for long-term-care insurance. According to official government projections, 43 percent of people turning age 65 will use a nursing facility, and 20 percent will spend five or more years there. Already financially squeezed Medicare and Medicaid programs will not be able to handle the tidal wave of aging Baby Boomers who will need long-term care.

Although long-term-care insurance is an important component of a household's portfolio of financial products, only 17 percent of U.S. households have any long-term-care insurance. The challenge for financial institutions is to find effective marketing strategies that would increase consumer awareness of the need for and availability of this critical financial product.

Household Ownership of Long-Term-Care Insurance