RADNOR, Pa.--(BUSINESS WIRE)--A recent Lincoln Financial survey conducted by Hanover Research, “Managing Long-Term Care Risk,” shows that protecting wealth from potential long-term care expenses is one of the most difficult risks for advisors to manage in a client’s retirement plan. The survey, which polled both consumers and financial advisors, also showed less than 40 percent of consumers have discussed long-term care planning with their advisors, and less than one in 10 advisors has implemented a long-term care solution for the majority of their clients.
“Unless you’ve experienced a long-term care event for yourself or a loved one, you may not realize the impact it can have on your financial security – it can be one of the biggest challenges any of us will face in our retirement years,” said Will Fuller, president of Lincoln Financial Group Annuity Solutions, Lincoln Financial Distributors and Lincoln Financial Network. “Consumers need guidance in choosing the right solutions to help secure the outcomes they’re looking for in retirement. This study demonstrates the opportunity for advisors to bring valuable expertise to their clients around planning for long-term care expenses.”
Expertise from a financial professional could benefit many consumers, as the survey shows consumers don’t fully understand the potential impact of long-term care costs, with only 22 percent believing they are likely to need long-term care and 73 percent significantly underestimating the costs associated with long-term care.
According to the “2014 Cost of Care Survey,” the average cost of a private room in a nursing home can be up to $97,611 a year. For those who prefer to receive care at home, the national average hourly rate for a home health aide is $21.77, which can quickly add up to $3,500 per month, or $42,000 a year, for an aide who provides care for only eight hours per day, five days a week. And the costs are significantly greater for skilled home health care: the national average fee for a registered nurse is $79.27 per hour, which may cost nearly $13,000 on a monthly basis, again for only a 40-hour work week.
Knowing All the Options
According to the Lincoln Financial “Managing Long-Term Care Risk” study, most consumers are not confident about their ability to pay for an unanticipated long-term care event, yet mistakenly believe their savings and government benefits will cover the cost of care. At the same time, for advisors, there are many barriers to having this sensitive conversation with their clients.
“Advisors may find many clients don’t want to face the inevitability of the need, yet it is estimated that 70 percent of people age 65 and older will need some form of long-term care. Just starting that conversation can be difficult,” said Andrew Bucklee, head of Insurance Solutions Distribution for Lincoln Financial Distributors. “On top of that challenge, advisors must sort through a wide range of solutions and funding options.”
Today’s insurance marketplace offers an increasing number of new solutions, with a range of costs and benefits, that are designed to help cushion unanticipated expenses and provide financial resources to help mitigate significant care events. Understanding the distinct advantages of each solution and the benefits of combining solutions in certain situations can make the difference in achieving a desired financial outcome.
“Advisors should understand how all of the options work, including hybrid solutions, which combine long-term care benefits with a life insurance policy or an annuity,” said Bucklee. “Understanding how these solutions work can help advisors find the best fit for their clients’ needs.”
The ability to help protect clients’ wealth from risks such as long-term care expenses and other potential threats was cited by advisors as the most important activity in their practice, and has evolved as the most significant driver of client satisfaction.
“It is more critical than ever that Americans understand the need to properly prepare for possible long-term care events in the future, especially as the population ages. Planning ahead for long-term care expenses not only helps protect a retiree’s finances, but it can also help protect the entire family from having to make hard choices during an emotional and difficult time,” said Bucklee.
To view additional findings from Lincoln’s Managing Long-Term Care Risks study, please open this presentation file at Lincoln’s website.
About the Long-Term Care Risk Survey
Lincoln’s “Managing Long-Term Care Risks” survey is the second in Lincoln’s Wealth Protection Expertise survey series, in which the company has polled consumers and advisors about various topics including financial attitudes and behaviors. Results for the survey are based on online research conducted by Hanover Research on behalf of Lincoln Financial Group. The research was conducted in September 2014, across the United States among 1,186 adults 18 or older, and 373 financial advisors with five years or more experience, and an average client portfolio of $100,000 or more.
The margin of error for the consumer data is +/- 3.7%. The sample was weighted by age, gender, region, sexual orientation and ethnicity. Demographic weighting targets are based on the 2010 U.S. Census figures for adults 18 or older.
The margin of error for the advisor data +/- 5%. The representative sample was sourced from Discovery Database including life and health licensed registered advisors with at least some familiarity of long-term care insurance or hybrid products.
About Lincoln Financial Distributors
Lincoln Financial Distributors, Inc. (LFD), the wholesale distribution business of Lincoln Financial Group (LFG), provides expertise and access to a range of solutions that help advisors protect wealth and deliver outcomes for their clients. Lincoln’s broad portfolio includes innovative annuity, life insurance and retirement solutions that focus on addressing issues related to taxes, healthcare, longevity, inflation and market volatility. LFD comprises seasoned financial professionals who distribute Lincoln products through licensed insurance agents, registered broker-dealers, and other financial services intermediaries. Affiliates are separately responsible for their own financial and contractual obligations.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help empower Americans to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $223 billion in assets under management as of June 30, 2015. Learn more at: www.LincolnFinancial.com. Find us on Facebook, Twitter (@lincolnfingroup), LinkedIn and YouTube. To sign up for email alerts, please visit our Newsroom at http://newsroom.lfg.com.