The Long-Term Care Insurance Paradox

The aging of the so-called baby boomer generation (Americans born between 1946 and 1965) was expected by some to be a boon to sellers of long-term care insurance. Given the increase in life expectancy in the United States, and the disproportionate concentration of income within this age cohort, many predicted that a spike in long-term care insurance sales would occur before and around 2011, the year when the first of the baby boomer cohort turn 65. However, with the exception of a short-lived 2010 spike, sales were largely stagnant or declining between 2002 and 2011. An article in the Journal of Financial Service Professionals explores some hypotheses on why this has been the case, and suggests possible alternative models of care financing.

The author suggests that some consumers may mistakenly assume that Medicare will cover their long-term care needs, or are hoping that the Medicare and Medicaid programs will be expanded to cover such needs.

The author argues that long-term care insurance has none of the emotional appeal of other forms of insurance (such as homeowners’ and auto-owners’ insurance, which are motivated by legal requirements and a fear of loss, and life insurance, which the author argues is encouraged by a love for family). There is a psychological bias toward disregarding one’s own future need for long-term care financing, and consumers are likely to focus on the possibility that they will never need long-term care services for themselves, and thus elect to spend their money elsewhere.

As a solution, the author suggests that life insurance policies with chronic illness accelerated death benefit riders (an option that allows policyholders to receive early payment in the event that a chronic illness interferes with their ability to manage activities of daily living) may become a popular approach for aging baby boomers addressing their long-term care and chronic illness needs.


Kozol GB. The long-term care conundrum. Journal of Financial Service Professionals; (2013). January 2013: 30-35.

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