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Long Term Care Insurance - US - February 2011

Long Term Care Insurance – U.S. – February 2011 looks at the current marketplace, the implications of regulatory changes, and how consumer attitudes are changing in relation to this product. Research conducted for this report tells us that awareness of long term care insurance and ownership of this product is not as high as it could be. However, there is some thought that the Community Living Assistance Services and Support Act (CLASS Act), which is included in the healthcare reform legislative package passed in 2010 could help raise awareness somewhat.

The industry itself has experienced some turmoil as some insurers have exited the business and others have substantially increased premiums. Mintel’s consumer data shows that Baby Boomers and others recognize the intrinsic value of long term care insurance but haven’t opened up their wallets yet to buy, due to a number of factors. Because of this, companies are innovating in order to find new ways to attract buyers. For instance, hybrid products are being created that tie in long term care benefits to annuities and whole/universal life insurance products.

The long term care insurance industry is going through a significant amount of change. Some established industry leaders have discontinued offering the product, making the industry less fragmented but still competitive. Consumers are somewhat convinced that they need long term care insurance, but the industry is having a difficult time spurring them to act on it. With this in mind, this report looks at various trends and developments impacting the industry, such as:

  • Society at large is just emerging from a major recession. Will this influence Baby Boomers to spend less on “stuff” and more on preparing for a more secure future for themselves and their families? More specifically, will this translate into an awareness that they need to arm themselves with long term care insurance (LTCi)?
  • To what extent will the CLASS Act portion of the 2010 Healthcare reform bill affect the industry?
  • Consumers are most likely to say that they have not purchased LTCi because it is too expensive. To what extent can or will the industry become proactive in addressing this concern?

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Table of contents

  1. Scope and Themes

      • What you need to know
        • Data sources
          • Consumer survey data
            • VMS
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                    • Companies mentioned in this report
                    • Executive Summary

                      • Industry overview
                        • Long-term care insurance penetration rate is low
                          • Hybrid/combination products showing promise
                            • The CLASS Act may bring advantages to the industry
                              • Price of LTCi and trust are major barriers
                                • The internet is gaining a foothold
                                • Insights and Opportunities

                                    • Key points
                                      • Money is tight for the Boomers
                                        • Figure 1: Attitudes about personal financial situation, those aged 45-54 and overall, January 2011
                                      • A good proportion of those 65+ are doubters about LTCi
                                      • Inspire Insights

                                          • Trend—Living Longer, Better
                                            • Implications
                                            • Market Size

                                              • LIMRA paints a sobering picture of the industry
                                                • Figure 2: Group and individual long-term care insurance market based on participants’ data, 2006 and 2009
                                            • Competitive Context

                                              • Key points
                                                • The CLASS Act
                                                  • MetLife pulled out of the LTCi business
                                                    • Hybrid/Combination products alter the LTC landscape
                                                      • Most policies are issued to 44-64 year olds, premiums average $2,200+
                                                        • Figure 3: Average annual premiums 2008, by age group
                                                        • Figure 4: LTCi sales by issue age, individual policy sales, 2007, by age group
                                                        • Figure 5: LTCi sales by issue age, group policy sales (employer-sponsored), 2007, by age group
                                                        • Figure 6: Average Length of LTCi benefit, 2008
                                                      • Claimants generally 80+ and females
                                                        • Figure 7: Percentage of long-term care claims paid, by gender, 2008
                                                        • Figure 8: Percentage of long-term care claims paid, by type of care facility, 2008
                                                        • Figure 9: Age at which new claims are opened, 2008
                                                    • Marketing Channels

                                                      • Key points
                                                        • Employer sponsorship is most common channel for LTCi
                                                          • Figure 10: Channel through which LTCi was purchased, by gender, November 2010
                                                        • Buying channels differ by generation
                                                          • Figure 11: Channel used to obtain LTCi, by gender, November 2010
                                                        • Familiarity stems from several sources
                                                          • Figure 12: How became aware of long-term care insurance, by gender, November 2010
                                                          • Figure 13: How became aware of long-term care insurance, by age group, November 2010
                                                          • Figure 14: How became aware of LTCi, by household income, November 2010
                                                      • Market Drivers

                                                        • Key points
                                                          • The U.S. population is getting older
                                                            • Figure 15: U.S. population, by age, 2010-15
                                                          • Average life expectancy is currently 78
                                                            • Figure 16: Life expectancy of U.S. population, 2007
                                                          • The economy is still troubled
                                                            • Figure 17: U.S. unemployment rate, by month, July 2008-December 2010
                                                            • Figure 18: Total non-farm payroll losses or gains, in thousands, October 2008-December 2010
                                                            • Figure 19: Employment–Population ratio, January 2000-December 2010
                                                          • Consumers are anxious about money
                                                            • Figure 20: Consumer debt, 1999-2010
                                                          • Credit card debt has recently declined, but why?
                                                            • Baby Boomers have a disconnect with LTCi
                                                            • Leading Companies

                                                              • Many shockwaves in the industry
                                                                • John Hancock leads in individual sales
                                                                  • Figure 21: annualized premium for individual long term care insurance sales, 2006 and 2009
                                                                • John Hancock leads for new Group sales
                                                                  • Figure 22: New group long-term care insurance market share, by carrier, 2006 and 2007
                                                                  • Figure 23: In-force group long term care insurance market share, by carrier, 2006 and 2009
                                                              • Brand Qualities

                                                                • Key points
                                                                  • Honesty most important quality
                                                                    • Figure 24: Factors that establish trust with financial services companies, July 2010
                                                                    • Figure 25: Attributes that describe actual insurance companies, July 2010
                                                                • Innovation and Innovators

                                                                  • Key points
                                                                    • Genworth Financial’s My Future, My Plan
                                                                      • Genworth Financial’s Let’s Talk Campaign
                                                                        • Total Living Coverage Annuity from Genworth Life
                                                                          • Prudential’s LTC Evolution Product
                                                                            • John Hancock findtheanswers.com
                                                                              • John Hancock LIFT Wellness Program
                                                                                • John Hancock LifeCare
                                                                                • Marketing Strategies

                                                                                  • Key points
                                                                                    • Overview
                                                                                      • Print advertising
                                                                                        • Figure 26: Unum Caring print ad, 2010
                                                                                      • Direct mail advertising
                                                                                        • Figure 27: MetLife direct mail ad, 2009
                                                                                        • Figure 28: Genworth Financial My Future, My Plan direct mail ad, 2010
                                                                                        • Figure 29: John Hancock Lift Wellness Program direct mail ad, 2010
                                                                                        • Figure 30: John Hancock LifeCare direct mail ad, 2010
                                                                                        • Figure 31: Bankers Life and Casualty long term guide direct mail ad, 2010
                                                                                      • Online and Email advertising
                                                                                        • Figure 32: Genworth Life Insurance Total Living Coverage email ad, 2010
                                                                                        • Figure 33: John Hancock CLASS Act survey results to producers email ad, 2010
                                                                                        • Figure 34: Mutual of Omaha Multi-Life LTCi email ad, 2010
                                                                                        • Figure 35: John Hancock CPI-Linked Inflation LTC email ad, 2010
                                                                                        • Figure 36: LTCI Partners Special Report Newsletter email ad, 2010
                                                                                        • Figure 37: John Hancock findtheanswers.com online storyboard, 2010
                                                                                      • Television advertising
                                                                                        • Figure 38: Genworth Financial Celebrates Caregivers, 2009
                                                                                        • Figure 39: Unum Fashion Business, 2009
                                                                                        • Figure 40: John Hancock Man in Office Texting, 2010
                                                                                        • Figure 41: AARP/Genworth Help Protect Your Future Plan, 2010
                                                                                    • The Consumer

                                                                                        • Key points
                                                                                          • Only 10% own LTCi, and only about half are aware of this product
                                                                                            • Figure 42: Ownership and familiarity with long-term care insurance, November 2010
                                                                                            • Figure 43: Ownership of insurance products, by gender, November 2010
                                                                                            • Figure 44: Ownership of insurance products, by age group, November 2010
                                                                                            • Figure 45: Ownership of insurance products, by household income, November 2010
                                                                                          • Nearly all owners satisfied with LTCi
                                                                                            • Figure 46: Satisfaction with long-term care insurance purchased, by gender, November 2010
                                                                                            • Figure 47: Satisfaction with long-term care insurance purchased, by gender, November 2010
                                                                                          • Familiarity with LTCi highest among those 55+
                                                                                            • Figure 48: Familiarity with long-term care insurance, by gender, November 2010
                                                                                            • Figure 49: Familiarity with long-term care insurance, by age group, November 2010
                                                                                            • Figure 50: Familiarity with long-term care insurance, by household income, November 2010
                                                                                          • Most non-owners see benefits to owning LTCi
                                                                                            • Figure 51: How beneficial would it be to have long-term care insurance, by gender, November 2010
                                                                                            • Figure 52: How beneficial would it be to have long-term care insurance, by age group, November 2010
                                                                                            • Figure 53: How beneficial would it be to have long-term care insurance, by household income, November 2010
                                                                                          • Having less worries, asset protection key
                                                                                            • Figure 54: Importance of features of long-term care insurance, by gender, November 2010
                                                                                            • Figure 55: Importance of features of long-term care insurance, by age group, November 2010
                                                                                            • Figure 56: Importance of features of long-term care insurance, by household income, November 2010
                                                                                          • Barriers are ambivalence, cost of LTCi
                                                                                              • Figure 57: Attitudes about aging and future care, by gender, November 2010
                                                                                              • Figure 58: Attitudes about aging and future care, by age group, November 2010
                                                                                              • Figure 59: Attitudes about aging and future care, by household income, November 2010
                                                                                          • Profile of LTCi Owners

                                                                                              • Key points
                                                                                                • LTCi owners are mostly females and/or 55+
                                                                                                  • Figure 60: Demographic profile of long-term care insurance owners, gender and age, June 2010
                                                                                                • Nearly all LTCi owners are white, with half earning more than $75k
                                                                                                  • Figure 61: Demographic profile of long-term care insurance owners, by race/Hispanic origin and household income, June 2010
                                                                                                • LTCi owners likely married
                                                                                                  • Figure 62: Demographic profile of long-term care insurance owners, by household size and marital status, June 2010
                                                                                                • More likely to own life insurance and at high values
                                                                                                  • Figure 63: Demographic profile of long-term care insurance owners, by type of insurance owned, June 2010
                                                                                                  • Figure 64: Demographic profile of long-term care insurance owners, by type of life insurance owned, June 2010
                                                                                                  • Figure 65: Demographic profile of long-term care insurance owners, by value of life insurance owned, June 2010
                                                                                                • LTCi owners likely invested
                                                                                                  • Figure 66: Demographic profile of long-term care insurance owners, by ownership of mutual funds/brokerage accounts, June 2010
                                                                                                • Many have retirement products, own stock
                                                                                                  • Figure 67: Demographic profile of long-term care insurance owners, by ownership of investments, June 2010
                                                                                                • LTCi owners secure, confident about money
                                                                                                  • Figure 68: Attitudinal profile of long-term care insurance owners, June 2010
                                                                                              • Cluster Analysis

                                                                                                  • Doubters
                                                                                                    • Demographics
                                                                                                      • Characteristics
                                                                                                        • Opportunity
                                                                                                          • Believers
                                                                                                            • Demographics
                                                                                                              • Characteristics
                                                                                                                • Opportunity
                                                                                                                  • Fence Sitters
                                                                                                                    • Demographics
                                                                                                                      • Characteristics
                                                                                                                        • Opportunity
                                                                                                                          • Cluster characteristics
                                                                                                                            • Figure 69: Long-term care insurance clusters, November 2010
                                                                                                                            • Figure 70: How became aware of long-term care insurance, by long-term care insurance clusters, November 2010
                                                                                                                            • Figure 71: How beneficial would it be to have long-term care insurance, by long-term care insurance clusters, November 2010
                                                                                                                            • Figure 72: Importance of features of long-term care insurance (mean score), by long-term care insurance clusters, November 2010
                                                                                                                            • Figure 73: Agreement with statements (mean score), by long-term care insurance clusters, November 2010
                                                                                                                          • Cluster demographics
                                                                                                                            • Figure 74: Long-term care insurance clusters, by gender, November 2010
                                                                                                                            • Figure 75: Long-term care insurance clusters, by age group, November 2010
                                                                                                                            • Figure 76: Long-term care insurance clusters, by household income, November 2010
                                                                                                                            • Figure 77: Long-term care insurance clusters, by race, December 2010
                                                                                                                            • Figure 78: Long-term care insurance clusters, by Hispanic origin, December 2010
                                                                                                                          • Cluster methodology
                                                                                                                          • Appendix—Trade Associations

                                                                                                                            Companies Covered

                                                                                                                            • American Association of Retired Persons (AARP)
                                                                                                                            • American Council of Life Insurance, Inc. (ACLI)
                                                                                                                            • American Council Of Life Insurers
                                                                                                                            • GE Financial Assurance Holdings, Inc (Genworth Financial Inc)
                                                                                                                            • Insurance Information Institute Inc.
                                                                                                                            • John Hancock Financial Services, Inc
                                                                                                                            • LIMRA International
                                                                                                                            • MetLife, Inc.
                                                                                                                            • National Association for Fixed Annuities (NAFA)
                                                                                                                            • National Association of Health Underwriters
                                                                                                                            • National Association of Insurance Commissioners (NAIC)
                                                                                                                            • Society of Actuaries (SOA)
                                                                                                                            • U.S. Bureau of Labor Statistics

                                                                                                                            Long Term Care Insurance - US - February 2011

                                                                                                                            £2,684.63 (Excl.Tax)