Nov. 14 — Although a good 40% of baby boomers have considered long term health care insurance, the decision to buy it is rarely made. In a new survey by NBER Retirement Research Center and reported on by the Financial Literacy Project, several academics found that as in so many other decisions involving delayed gratification, we baby boomers have not decided to pay today for this protection tomorrow.
Background in the report pointed out that 12% of men and 22% of women have at least a 3 year stay in a nursing home, at an expected cost in the vicinity of $75,000 per year.
The researchers found several main issues that help explain why only about 10-12% of the elderly have purchased long term care insurance:
– People who are motivated to leave money for their heirs are more likely to purchase
– Folks who think family members will take care of them are less likely to purchase
– Even though they understand they might cause a burden on their loved ones someday, most boomers do not find this a motivating reason to buy
– Some people do not purchase the insurance because they are afraid of rate hikes down the road or having claims denied
– Those who realize now they will have health problems in the future are the most likely to purchase this coverage
So far the mood among boomers is not encouraging for salespeople in this field. As we age and begin to experience more health problems, perhaps we will get more interested – although coverage does get more difficult with pre-existing conditions.
You can find the complete study here at this link. Here is a good reason to consider long term care, based on 2011 pricing trends for long term care, which rose between 4.4% and 5.6% in 2011 according to the MetLife Mature Market Institute.
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