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Prudential
Study Finds Employees Desire Employer Sponsored Access to Long
Term Care Insurance
Complementing access with education is critical
June 2003 (Newstream) -- When selecting employee benefits, American
workers now rank the importance of long term care insurance equal
to that of group life insurance, according to Prudential Financial
Inc.'s (NYSE:PRU) 2003 LTC Insurance Employee Benefit Study (see
chart 1).
"The rapidly increasing importance of long term care insurance
to American workers and their interest in having this coverage
available have interesting implications for many employers," said
Ed Baird, president of Prudential's Group Insurance business.
The 2003 LTC Insurance Employee Benefit Study signals an opportunity
for employers to enhance employee financial safety and confidence
by adding long term care insurance to the palette of employee
benefits.
Notable survey findings include:
- Long Term Care Insurance is becoming a primary employee
benefit
Long term care insurance is now as important to workers as life
and disability insurance. At first glance, it may seem surprising
that a relatively new product like long term care insurance
is now as important as the much more established and venerable
group life product. However, this finding may not be unexpected
given that the need is now so well recognized; virtually all
Americans have been touched by a family member or friend making
the often difficult financial decisions and sacrifices needed
when long term care assistance becomes necessary.
- Access to Long Term Care Insurance through the employer
is preferred
Sixty-two percent of workers said they would consider long term
care insurance as a voluntary benefit if their employers offered
it. An overwhelming 82 percent would consider buying coverage
if their employer subsidized a portion of the cost (see chart
2). The importance of employer contribution to at least some
of the expense is demonstrated by employees who would "definitely"
buy LTC insurance doubling from 14 percent when the coverage
is not employer subsidized to 30 percent purchase intent with
employer financial assistance.
- Employees need better information and education to determine
if LTC insurance is right for them
Today, 56 percent of consumers are not familiar with the benefits
and features of long term care insurance. In fact, only 14 percent
feel very familiar (see chart 3). As yet, too few (only 30 percent)
have talked with any financial professional to better understand
whether this product is right for them. The lack of knowledge
is compounded by misperceptions. In Prudential Financial's survey,
two-thirds (62 percent) of middle class and affluent Americans
believe or are unsure whether government programs would cover
the cost of a nursing home care or a home healthcare aide, if
they were no longer capable of caring for themselves (see chart
4).
- Workers are beginning to connect the benefits of Long
Term Care Insurance to protecting their retirement assets
The annual bill for nursing home care averages $56,0001
or higher in urban metropolitan areas, and that could wipe out
a lifetime of retirement savings in a matter of a year or two
for many workers. Long term care insurance complements American
workers' efforts to save for their retirement by protecting
their retirement assets for themselves and other family members.
"Believing the government will pay for your long term care needs
is a mistake," said Malcolm Cheung, vice president, Group Long
Term Care at Prudential. "People don't realize that Medicare does
not necessarily pay for custodial care. And, in order for Medicaid
to pay for such care, a person must 'spend down' his assets and
impoverish himself, and this is not effective financial planning,"
Cheung continued. "It is encouraging that workers are beginning
to make the connection between growing their retirement savings
and protecting these assets from the financial drain of long term
care expenses."
Prudential's Financial's 2003 LTC Insurance Employee Benefit
Study, clearly identifies the urgent need to educate the workforce
about the importance of having long term care coverage. "People
need to know about the limitations of government programs for
long term care and why a long term care insurance policy makes
financial sense," said Ed Baird, president of Prudential's Group
Insurance business. "The financial industry and employers have
a real opportunity to educate a maturing population about the
benefits of long term care insurance."
Prudential Financial polled 300 individuals who are 25 - 65 years
of age; employed full-time or part-time by companies with 500
or more employees; and reporting an annual household income of
$40,000 or more. The survey was conducted in March 2003 to determine
employee familiarity with and interest in having long term care
insurance. The Prudential Insurance Company of America, a Prudential
Financial company, underwrites and distributes a full range of
group life, disability, long term care and related insurance products
through employers and other groups in connection with employee
and member benefit plans. Prudential's resources, financial strength
and stability allow it to honor long term commitments to employers
and employees alike.
Prudential Financial companies, with approximately $550 billion
in total assets under management and administration as of March
31, 2003, serve individual and institutional customers worldwide
and include The Prudential Insurance Company of America, one of
the largest life insurance companies in the U.S. These companies
offer a variety of products and services, including life insurance,
property and casualty insurance, mutual funds, annuities, pension
and retirement related services and administration, asset management,
securities brokerage, banking and trust services, real estate
brokerage franchises and relocation services.
1 AARP, "Beyond 50", May 2000, p.3
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Produced for Prudential Financial
Contact:
Dawn Kelly, Prudential
(973) 802-7134
Small
Busniess Insurance Plans
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