Multi-Gen Planning

Aging In Place: The New American Dream

Retirement and the long-term care nightmare

by: Larry Nisenson

Larry Nisenson is the Chief Growth Officer for Assured Allies, a company providing long-term care and retirement planning solutions. Visit https://www.assuredallies.com/.

Aging in place is the new American dream. The older generations have spoken, with more than three-quarters (77%) of adults 50 and older saying they want to stay in their homes as they age. However, successfully living at home requires careful consideration and forethought, particularly as it relates to financial preparedness. Consequently, this dream can become a nightmare for millions of Americans who are woefully ill-prepared when it comes to long-term care planning.

Today, clients face the convergence of three major trends that threaten to derail their vision. The mounting retirement crisis, lack of long-term care planning, and aging population burdened by longstanding illnesses, come together to pose a potentially devasting dilemma that can compromise their aspiration to age in place and enjoy a happy, healthy retirement.

The retirement crisis continues to be a menacing presence. Overall, 80% — or 47 million households with older adults — are financially struggling or at risk of economic insecurity as they age. While 58% of retirement savers (including retirees) cite outliving their assets as their greatest retirement fear, they are perilously unprepared. Social Security is the primary source of income for more than half (54%) of U.S. retirees. Of this share, 20% have no secondary source of retirement income. And despite preferences to age in place, 60% would be unable to afford two years of in-home services.

Recent research also shines a light on a short-sighted attitude regarding long-term care services. While 70% of retirement-age Americans will need ongoing care at some point, merely 14% of retirees are very confident they’ll be able to afford it, and an alarming 31% have no plans for long-term care whatsoever.

The sorry state of our country’s overall health is perhaps the most distressing piece of the puzzle. The U.S. has the lowest life expectancy among high-income countries and six in 10 American adults have a chronic disease. Plus, nearly 42% of adults suffer from obesity, directly linked to preventable deaths from heart disease, stroke, type 2 diabetes, and certain cancers.

As the population ages– adults age 65+ expected to reach over 80 million by 2040 – this ominous reality promises to intensify in the future. However, there is a silver lining. Promoting the pursuit of this new American dream presents the unique opportunity to help heighten clients’ long-term care readiness while bolstering agents’ profitability.

Build “The Best Alignment of Interests”

Today’s rapidly aging society must prompt a paradigm shift within the insurance industry. This unique demographic requires fundamental change in the attitudes of insurance professionals and how they perceive and service their clients.

The inherent nature of the agent-client relationship has been somewhat fractured amid carrier business directives to increase rates and decrease payouts or claims. This longstanding approach must evolve into one centered on a “Best Alignment of Interests” model that creates a mutually beneficial partnership between carriers, agents and policy holders. Crucially, this approach gives agents a vested interest in supporting clients in their pursuit of an enhanced quality of life. Ideally, the goal is an environment in which agents work with clients to keep healthier, longer will impact loss and claim ratios to benefit insurers and clients in the long run.

When it comes to building relationships with older adults, it is critical to discuss a long-term care plan to ensure they are prepared for a potential financially devastating event. Even though older Americans are the single largest group facing financial hardship, the topic is often ignored due to a lack of awareness. One of the most common, and perilous, misconceptions among agents and policy holders is that Medicare covers long-term care. The fact is that Medicare only covers basic medical needs, and not long-term care services.

This is a highly underserved market to which agents can lend their vital support as a partner in promoting extended quality of life. Be proactive in formulating a plan to help clients live the best possible versions of their lives.

Adopt Innovation For Aging Boomers

The Baby Boomer generation explosion means professionals will experience a significant increase in the number of clients who are, unfortunately, painfully unprepared, and whose specific needs must be addressed. Even though someone turning 65 today has a nearly 70% chance of needing future long-term care services, only 10% have a plan.

A seemingly counter-intuitive phenomenon, long-term care insurance purchases are declining despite the population’s urgent need. Policy sales have steadily ticked downward, with 2022 marking the lowest sales volume in over two decades. This trend is understandable due to heritage issues like inaccurate assumptions, which led to significant rate increases, lack of product innovation, agents and carriers dropping out of the market and overall consumer perception of the segment.

The writing is on the wall. The insurance sector imperative must be to foster innovation that will ignite behavioral and buying changes in this category and safeguard elderly individuals from financial insecurity during their retirement phase of life.

The writing is on the wall. The insurance sector imperative must be to foster innovation that will ignite behavioral and buying changes in this category and safeguard elderly individuals from financial insecurity during their retirement phase of life...

The logical first step is an application overhaul. Innovation can streamline the LTCI application process, which has traditionally involved in person exams and lengthy procedures that frustrate consumers and result in high rejection rates. Promisingly, the ability to streamline this inconvenience is already here. Improved risk selection and application processing techniques enable current insurance products to provide decisions within an hour. This tidier and expedited approach has led to better risk selection and significantly improved consumer experiences.

Innovation is also transforming the way insurance companies handle claims, making the process more efficient and precise. Automated initial claims routing streamlines the process, swiftly direct claims to the appropriate department or personnel for evaluation and next steps. We must replace legacy systems with automation that saves time and resources, leading to faster response times and reducing the risk of claims getting lost or mishandled.

Additional advancement opportunities exist in identifying potential policyholders who might require assistance and make future claims for health challenges. Those opportunities require insurers to analyze massive data sets mapped against population health metrics.

The evolution is powered by venture capital’s recognition of the massive business opportunity, driving investments in Insurtech companies upward of $11 billion. Much of this money will focus on resolving issues and friction points, leveraging machine learning to improve risk selection during the application process, generating better insights into what is driving morbidity and mortality.

An Ounce Of Prevention Brings Big Mutual Benefit

Preventative services play an integral role in protecting and promoting health, yet only 5% of adults 65-plus received these recommended services in 2020. By using data analytics and predictive modeling, insurance carriers can reach out to these individuals, offering assistance, guidance and resources to address their needs before a crisis occurs. This preemptive approach can prevent or mitigate potential problems, helping policyholders maintain better health and quality of life.

There’s a distinct difference between living well into old age and living “well” into old age. Realizing this fact, some insurance carriers are now incorporating innovative wellness programs into their pre-claim processes. These programs offer policyholders access to targeted, personalized health and wellness services like fitness programs, nutrition counseling, mental health support and preventive screenings. One example is Assured Allies’ NeverStop, an innovative Wellness Rewards Program that’s built right into your insurance policy. By encouraging healthier lifestyles and early intervention, these insurers reduce the chances of claims arising from preventable health issues while improving the overall customer experience, building stronger and deeper connections.

Small interventions can make a huge impact on health and well-being. Falls are the leading cause of fatal and nonfatal injuries for older Americans, with one out of four Americans age 65+ falling each year. Simply installing a grab bar in a bathtub can decrease fall hazards by 76%. And, treating hearing loss may lower the risk of dementia, with hearing aids reducing the rate of cognitive decline in older adults at high risk of dementia by almost 50% over a three-year period.

Preserving The New American Dream

The imminent “triple threat” facing insurers must be addressed to offset the significant cost of ignoring these looming realities. We can be optimistic as we witness Insurtech companies forging a new path with the introduction of innovative solutions created to revolutionize the insurance industry and address the threats head-on. These efforts are powered by our social obligation to serve the needs of the growing elderly population, and the business opportunities they present. The combined force of dynamic solutions and adaptive client service methods can drive the industry successfully into the future. And, perhaps most importantly, help our clients’ New American Dream come true.

 

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