How Long-Term Care Insurance Is Like the Internet


by Maxwell Schmitz It’s January 2002. The Dow Jones soars at over 10,000. Internet companies enjoy the last few months of their very first heyday—the inaugural golden era of tech stocks in what will prove to be a cyclical market. Once crisis came, people were quick to criticize the “scam artists” and “paper tigers” that “earned” and “lost” a fortune. Of course Pets.com and Webvan.com were insane ideas! It could never work. Critics and laypeople were oblivious to the eventual need for a marketplace built around broadband technology. Here we are in 2018, peering into the past with 20/20 vision. Today we see web-based companies clamber to enter an extremely crowded, yet successful, marketplace of online pet food and grocery delivery (see Chewy, Instacart, HelloFresh, Thrive Market, Amazon’s Whole Foods, Blue Apron, Sun Basket, etc.). Why is it working today, and why was it such a joke in 2002? Easy. In January 2002, only 10% of American adults used broadband internet. Today 84% of households have a computer or smartphone. That’s a 74% increase in just 16 years. The supply arrived ahead of the demand and now the demand has caught up. . This is the parallel to LTC. Less than 10% of Americans currently own long-term care insurance. With the advent of hybrid policies, I field the same question from insurance advisors at least every other week, “Isn’t LTC insurance on the way out?” The answer is a resounding no. Our supply is simply ahead of the demand. The oldest Baby Boomers turn 73 this year, with peak claims age less than ten years away. Most are still oblivious to their eventual need for long-term care services, even though the federal government has calculated the following projection: every 65-year-old in America has a 70% chance of using long-term care. American Baby Boomers will feel the pain. They are on track to be financially unprepared for the health event of their lifetime. We are positioned as the experts. You also have an opportunity to help these people preserve their retirement assets. Whether you view it as a choice or an obligation, your clients need your help when it comes to pressure-testing their financial plan. Talk to your clients today about the importance of long-term care insurance.
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