MacroMonitor Market Trends Newsletter August 2019

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The Impending Long-Term-Care Crisis

More than half of US citizens turning 65 today (52%) will need long-term care sometime in their lives, according to an AARP Public Policy Institute report on long-term-care support and services. Because roughly 10,000 Baby Boomer household heads are turning age 65 every day, the magnitude of need for care and support services will increase dramatically in the next decade. In spite of an increase in the number of households with long-term-care insurance (LTCI), LTCI coverage of this aging population faces a significant deficit, necessitating coverage by other means.

Figure 1: Trend: Has Long-Term-Care Insurance

Given the actuarial realities that half of all household heads age 65 years and older face, increasing ownership of LTCI is a step in the right direction. Nevertheless, policy ownership remains much lower than the need for protection. Cost is the reason that 47.5 million households give for lacking coverage—and LCTI may seem to be expensive. However, the cost for purchasing LTCI now is much less overall than what the actual cost of services and support will be without LTCI. About 28 million households say they have no current need—specious reasoning, because when the immediate need materializes, the household will be unable to secure LTCI. Annual policy cost escalates the older one is at time of policy purchase.

Figure 2: Trend: LTCI Transactions

Recent LTCI sales—sales in the past two years—have been relatively flat for the past two decades. The good news is that, after significant declines since the Great Recession, interest in obtaining long-term-care Insurance is starting to increase. Somewhat more than 16 million households suggest that if LTCI were available at their place of employment, they would consider obtaining coverage.

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