Fewer Americans Worried About Needing and Paying For LTC Yet More Believe LTC Costs Could Significantly Reduce Retirement Income and Assets
Boston – Despite the backdrop of an aging U.S. population with increasing longevity, and spiraling long term care (LTC) costs, Americans are less worried today than they were roughly a decade ago about needing and paying for LTC, according to a new survey of 1,000 people ages 21 to 75. The study, conducted by Greenwald & Associates in 2006 for John Hancock Life Insurance Company (John Hancock), surveys consumer attitudes about LTC, which are compared with the results of similar John Hancock surveys conducted in 1996, 1997, and 1998.
Long term care is the help someone who can no longer perform daily activities such as eating, bathing or dressing would need. This care can be received at home or in an assisted living facility, adult day care center or a nursing home.
“Our survey suggests that Americans hold a number of alarming misconceptions about their potential need for long term care,” said Laura Moore, senior vice president, John Hancock Long Term Care Insurance. “Their lack of worry and subsequent failure to plan for long term care despite understanding the financial impact it can have on people’s lives, can lead to serious consequences in the future.”
A majority of respondents (57%) said they were concerned about LTC costs - a number that dropped from 69 percent of respondents in the 1997 survey. In addition, fewer respondents, 51 percent versus 59 percent in 1997, expressed worry about ever needing LTC.
However, a greater number of people believed they would live to age 85 (64% vs. 61% in 1998), and more felt the cost of LTC could significantly reduce their retirement income and assets (85% vs. 76% in 1998).
Despite the level of concern about the reduction of retirement income and assets, the survey found that the majority of Americans (69%) have done little or no planning for LTC, versus 58 percent in 1996, and 47 percent in 1997. In fact, 43 percent have not planned at all, up from 34 percent in 1996 and 24 percent in 1997.
Little Understanding of How to Pay
When considering the LTC funding options, many Americans would have difficulty paying the costs out-of-pocket. Asked how they would pay for LTC if they were not planning on buying insurance coverage, 43 percent of respondents, up slightly from 40 percent in 1997, said they’d pay the entire cost with savings. However, a greater number of respondents (46%) felt they would not even be able to afford a year of LTC, more than in 1998 (43%).
As for relying on government programs as a source of funding, reactions were mixed. On one hand, respondents did not express a great deal of confidence in the future of Social Security, Medicare, or Medicaid. Sixty-one percent are not confident that Social Security will be there in retirement, up from 54 percent in 1998; 67 percent are not confident Medicare will be there, compared to 61 percent in 1998; and 62 percent are not confident Medicaid will be available, up from 55 percent in 1998. Yet, at the same time, 47 percent said they’d pay for LTC costs by qualifying for Medicaid by transferring assets to family members, up slightly from 45 percent in 1997.
The survey also found a lack of knowledge about LTC issues. On a 10-question true/false quiz about LTC basics, the majority of respondents got only four correct answers, the same result found in 1998.
“Clearly, long term care is difficult for Americans to think about – in fact, our survey suggests that they are in denial, taking a chance they won’t need care or just ignoring the fact that they might,” said Moore. “In the case of long term care, ignorance is not bliss. We’ve found that planning for long term care expenses can dramatically change the quality of care for those needing care and the quality of life for their families when a care situation arises. Once people take the first step in long term care planning, they often find that it is not as overwhelming and cost-prohibitive as they had thought.”
About John Hancock Long Term Care Insurance
Today, John Hancock, a unit of Manulife Financial Corporation, is one of the largest providers of LTC insurance overall with more than 912,000 clients and $1.1 billion of in-force premium. John Hancock has paid more than $1 billion in LTC insurance claims.
Having entered the retail LTC insurance market in 1987, John Hancock is the second-largest provider of individual coverage in the country. John Hancock began selling group LTC insurance in 1988 and today is the largest provider of employer-sponsored LTC insurance in the U.S.
In 2002, John Hancock and MetLife were selected by the Federal Government to offer Long Term Care Insurance to federal employees, retirees and various family members across the country. The program is the largest single employer-sponsored LTC insurance program of its kind.
When the company merged with Manulife Financial Corporation in 2004, John Hancock Long Term Care Insurance grew to include Manulife’s Avon Long Term Care Leaders (ALTCL), a specialized LTC insurance third party administrator and risk manager. Located in Avon, CT, ALTCL is known for its history in product development, underwriting and claim handling. Over the past 15 years, ALTCL management has developed LTC insurance programs for more than 20 companies in 14 countries.
About John Hancock and Manulife Financial
John Hancock is a wholly-owned subsidiary of Manulife Financial Corporation, a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$386 billion (US$330 billion) as at March 31, 2006.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock today offers a broad range of financial products and services, including whole life, term life, variable life, and universal life insurance, as well as college savings products, fixed and variable annuities, long term care insurance, mutual funds and various forms of business insurance.
Long Term Care Insurance is underwritten by John Hancock Life Insurance Company, Boston, MA 02117.
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Contact: Melissa Berczuk