In the next 20 years, seniors will make up over one-fifth of the Canadian population. Experts say that the public health and living assistance programs are not sufficient to meet baby boomers’ care requirements. One solution: long-term care insurance.
"For anybody to think that they are going to be [living] through 30 years, more or less, of retirement without health problems, I think they are dreaming," cautions Karen Henderson, a long-term care speaker and sales coach. She also runs the Long Term Care Planning Network which is a group of websites dedicated to care giving with news and information for advisors and the public.
Ms. Henderson feels that Canadians must sit down with an advisor immediately to discuss the challenges related to care-giving and how to procure adequate long-term care insurance (LTC) coverage. Sound retirement planning must take the risk of longevity into account, she insists.
For their part, insurers are urging advisors to raise their clients’ awareness of this product. Planning for retirement must include what will happen when the client requires additional living and health care. "The client cannot financially bear an additional expense of $3,000 per month once they lose independence," says Nathalie Tremblay, health product manager at Desjardins Financial Security (DFS).
The client age for LTC insurance is between 40 and 60, with the ideal range of 50 to 59.
Often, advisors do not even know the product, says Greg Pearson national consultant, LTC sales at RBC Insurance. "I think they have a general awareness that a product such as LTC exists. But many of them have no idea how it works."
The most recent sales statistics show that advisors still have a huge challenge ahead of them in terms of promoting product awareness. This trend is reflected in LIMRA International’s annual survey on LTC sales in Canada. At yearend 2006, only 56,000 Canadians held an LTC policy, the LIMRA survey reveals. This is a disproportionately low figure given the statistics on the aging of the Canadian population.
Advisors are not the only ones who are not effectively promoting the product. The insurance industry, the government, etc., are not taking responsibility for explaining the needs to Canadians, Ms. Henderson says.
Some insurers note that Canadians’ complacency about government help is significantly hampering sales of LTC products. Many Canadians still believe that the government will take care of all their needs if they lose their independence one day.
"Advisors always tell us that if we want to help them in this market, we need to advertise on TV and in the mass media for example," Ms. Tremblay of DFS explains. Advisors are clamouring for help to inform consumers about the product because "no one knows what it is and no one is aware of the needs," she continues.
Manulife Financial, however, has recently launched a new LTC product backed by reams of promotional materials for advisors.
Rather than be alarmed by the competition, other insurers welcome this development. The more companies are in the game, the more the product will generate buzz, they say.
David Baker, director, individual health product development at Sun Life Financial, says the launching of a new product by a major competitor such as Manulife will inevitably increase the level of awareness about LTC among the public and advisors.
He adds that Sun Life is presently the leader in the LTC market, with a share of over 65%. There is an industry-wide consensus that Sun Life has the dominant market share in the LTC sector, followed by RBC insurance. Manulife and DFS are the two other key players in the market.
Despite Manulife’s highly visible campaign, heightening awareness about the need for LTC may continue to be tough going. A survey the insurer commissioned found that a very large proportion of the population prefers to do unpleasant tasks than to talk about LTC for an hour (see charts on page 12). Paradoxically, more than 82% of the respondents say they do not want to become a burden on their loved ones.