MY LONG TERM CARE PREDICTIONS FOR 2015
It’s time to ponder what changes lie in store for our long term care insurance industry. Some predictions are easy to make, while others require looking into a very cloudy crystal ball. Armed with the humility that some of my predictions have proven to be seriously wrong in the past, here goes.
The Economy: The most recent economic indicators would lead one to believe that the recession of 2008 has truly ended, at least for many of our better-off citizens. Most economists predicted a slow recovery, and they have been indeed correct. Now the economy seems to be picking up steam, with unemployment lowering substantially from its peak in 2009.
Stores and restaurants in my area have been very busy, and I believe that Holiday retail figures will be well ahead of last year. Lower gas prices will create consumption in other areas. The picture in Europe and Asia is still very mixed at best, and this could slow the American economy slightly, but barring a major political event elsewhere, things are looking up in the U.S.A.
These factors should result in an increase in consumer confidence and a greater willingness by many Americans to plan for the future. We are seeing some modest lift in our lead marketing response rates, and we expect this trend to continue in 2015. This is an important positive factor for long term care predictions.
The Government: Washington will continue to be in gridlock. Both parties are fractured into competing groups, and the moderates have lost a great deal of ability to influence events. Most efforts will be concentrated on keeping the government running, with passionate debates on the budget, immigration and tax reform. Long term care issues will be relegated to committee conversations.
It has been assumed that President Obama is a lame duck President and unable to influence events, a full two years before he leaves office. This assumption is not constructive. Any President should have the ability to truly be a President throughout his or her period in office. The President’s style has changed during the last two months to a more assertive one, and many citizens seem to approve. We expect the President to continue on this path. This could well lead to more conflict with the Republican Congress and unfortunately, more gridlock.
Income inequality is becoming more and more apparent. The majority of Americans have not benefited from the improvement in the overall economy. Income inequality may well be the key issue in the 2016 elections.
The Products: There was a considerable expansion of long term care solutions in 2014, and I expect this trend to only increase in 2015. Although traditional long term care insurance is normally the best long term care plan, it is far from the only one available. There are now eight types of long term care plans in the marketplace, each with its advantages and disadvantages.
But there will also be an increase and a broadening in the structures of traditional long term care insurance products. The carriers are trying to conceal their latest ideas, but new and innovative plans have been filed. Look for these new plans to contain elements that are common to current life insurance products.
The ultimate goal is a new type of partnership between the insurance carriers and the government. This will necessitate new and ground-breaking legislation in order to create a new legal framework for such a partnership. Unfortunately, this won’t happen in 2015.
Agents and brokers will continue the recent trend towards reducing benefits in order to increase affordability. The average sale for traditional long term care insurance has increased just above one percent over the last twenty years, from about $ 1,800 to $ 2,400. At the same time, long term care insurance rates have increased up to threefold. That’s proof of severe price resistance. Many buyers will not consider purchasing a policy costing over $ 2,000 per year. Many more buyers would consider purchasing a policy costing about $ 100 per month.
Carriers will encourage selling smaller benefits to younger people. This may prove to be an attractive solution in the employer market, once the human relations people have made their adjustments to the Affordable Care Act and are comfortable with absorbing its future costs. From where I sit, we’re still a year or two away from real traction here.
The Need: Another year has passed, and once again, the need has grown. Here come the baby boomers, now ages 51 to 69. Their parents are mostly in their eighties, getting sick and needing care. More and more baby boomers will learn from their parent’s experience that they need a long term care plan. More and more will realize that their health can also change at any time.
As the need grows, the climate for long term care planning will improve. Our industry is poised for a breakout year. Will 2015 be the year? I doubt it, but my prediction is that sales will increase, especially for those who have stayed the course and are still long term care insurance specialists. If you’re not one of these specialists, you should partner with one of them…and us!