What We Know About Buyers and Non-Buyers of Private Long-Term Care Insurance: A Review of Studies. F. Buying Behavior

08/01/2004

Figure 1 summarizes specific attitudes of buyers and non-buyers towards LTC insurance as reported by Ritchey et al. (1991). Clearly, buyers have different attitudes about insurance than non-buyers: they are more likely to believe that the insurance is a good investment and that premiums are reasonable given the services provided. In contrast, non-buyers are more likely to believe they would do better saving on their own.

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Buyers also have confidence that the insurance will pay benefits as promised whereas non-buyers are more likely to distrust insurance companies. These differences also persist in relation to attitudes toward insurance agents. Buyers are less likely to think that agents are only interested in the sale. Slightly less than two-in three non-buyers believe that agents are only interested in making a sale. These strong attitudinal differences go a long way in explaining how it is that individuals with relatively similar socio-demographic characteristics sort themselves into buyers and non-buyers.

As Table 4 shows how the motivations for purchasing LTC insurance have, or have not, changed over time. These historical trends are based on the three HIAA studies conducted over the last decade. The reasons mentioned most often and which have stayed relatively consistent over the last decade, are to protect savings, to assure adequate income for a spouse, to assure the affordability of services, and to avoid being a burden on family. Reasons which are important, but less so than those cited above, relate to the freedom to choose services, to avoid depending on government programs, and to leave an estate.

TABLE 4: Reasons to Buy LTC Insurance
Very Important Reasons to Buy 2000 1995 1990
Protect assets 71% 67% 72%
Not be burden to family 69% 69% 75%
Can afford needed health care services 68% 66% 70%
Adequate income will remain for the spouse if costly services are needed 62% 59% 74%
Freedom of choice with respect to services 58% 59% 74%
Government will not cover the care that may be needed 54% 54% 54%
Will not have to depend on any of the programs for the needy 45% 50% 52%
Leave an estate to family/friends 43% 43% 38%
The benefits payable are not considered taxable 20% N.A. N.A.

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