Boomer generation dissimilar when planning for LTCI
By Tom Riekse Jr.
While baby boomers are considered a generation in themselves, an emerging strategy in marketing to this generation involves the recognition of its two markets: the leading-edge market (born between 1946 and 1955), and the trailing-edge market (born between 1956 and 1964). For example, both the current and prior first ladies are considered part of the boomer demographic. Laura Bush, born in 1946, is part of the leading-edge market and Michelle Obama, born in 1964, is part of the trailing-edge market. While they are considered part of the same generation, it is important to recognize that they grew up in very different times, with very different expectations.
The MetLife Mature Market Institute recently completed a study entitled "Boomer Bookends: Insights Into the Oldest and Youngest Boomers." This book addresses the point that these two markets call for different approaches. Not surprisingly, the older, leading-edge boomers are most concerned about health care costs, while the trailing-edge boomers are simply concerned with beginning (or catching up on) retirement planning.
However, both markets will have to think about the need for long term care planning. This article will explore different approaches you can take for these two different markets -- and how to present long term care planning as a viable requirement for the future.
Looking at trailing-edge boomers
Let's look first at the trailing-edge boomers. In many ways, this group is similar to Generation X, who came of age during the large deficits of the 1980s. They were forced to understand the fiscal realities facing the country and the fact that social security would possibly be under stress. However, regarding long term care, this group is really unprepared for the costs. This group also underestimates the cost of care.
Members of this group might be more likely to purchase long term care through an employer as part of a voluntary benefits offering. Trailing-edge boomers are looking for affordable premiums and a convenient way to purchase. Although automatic inflation protection is the most ideal form of long term care insurance (LTCI), the fact that it might be 50 percent more expensive than programs with guaranteed purchase options means the GPO option might be of more interest for this group.
Leading-edge boomers are more prepared
The leading-edge boomers are more likely to have already put aside money for retirement. In addition, many are experiencing aging parents or relatives dealing with long term care issues. When talking to a prospect in the leading-edge market, learning about personal experiences with long term care can help determine the most effective trajectory of the conversation.
For example, those who have experienced the devastating effects of early onset Alzheimer's may be more interested in a comprehensive product with enough daily or monthly benefits to pay for care in a specialized Alzheimer's facility. They will be interested in inflation coverage to keep up with the cost of care, and may be less sensitive to premium because they understand the cost of care. They are more concerned about the quality of care that the contract offers and may delve into contract details, so it's important to see where care can be provided and who can provide it.
Conversely, the leading-edge boomers who have not had personal experience with long term care may consider the exposure their current retirement portfolio has to the cost of long term care, resulting in a protection mindset. Several carriers, based on their consumer research with this market, have designed products that allow consumers to purchase LTCI in large dollar increments -- for example, choosing between $100,000 and $1,000,000 of protection in $100,000 increments. This way, they can correlate the amount of coverage to their assets with options for built-in inflation or guaranteed purchase options. The financial stability of the carrier will also be important for this group.
Addressing a generation
Regardless of whether you are talking to a leading-edge or trailing-edge boomer, one thing does unite both groups -- they won't respond to hard or scare tactics. They are understandably skeptical of slick marketing materials and won't automatically believe that the carrier is sound just because they've been around for years. Taking the time to consider and understand the specific mindset and demographic of a baby boomer will help deliver the right solution.
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