Lincoln Financial Lincoln Financial Life Stages Survey: Long-Term Care September/October 2010 LCN1102-205062

Lincoln Financial

Lincoln Financial Life Stages Survey:Long-Term Care

September/October 2010

LCN1102-205062

Objectives and Methodology

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Key Objectives

• Investigate how consumers go about planning for their long term care and understand the need for long term care insurance as a separate asset class

• Determine the level of understanding that consumers have about long term care insurance

• Investigate the impact that long term care can have on the lifestyle of consumers and their families

• Understand how previous experiences (either direct or indirect) with long term care impacts current views and planning

3

Methodology

• Survey conducted September/October 2010

• 1002 total respondents

– 702 completed the survey online

– 300 completed the survey via phone

• Both surveys lasted approximately 15 – 20 minutes

• All respondents are age 40 – 70 and have investable assets of $100,000 or annual household income of $100,000 (or both)

• Study results contain a margin of error of +/- 3.10 percentage points at the 95% confidence level

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Quotas Were Set So That Respondents Were Evenly Divided Between Direct Experience, Indirect

Experience, and No Experience

A-6. Have you ever overseen the long term care of an adult loved one?

5

n = 1002

Direct Experience

Indirect Experience

No Experience

6

NOTE: Unless otherwise noted, when totals are

displayed, data is weighted based on experience so that the survey sample

matches the general population.

Key Findings

• Less than half have made plans to ensure they have sufficient funds to cover long term care expenses, yet many say that it is important to plan for long term care needs.

• Most recognize that their lifestyle would change if they need long term care, but unless they have experienced a lifestyle change themselves while overseeing a loved one’s care (or watched others experience a lifestyle change), they are less likely to recognize the impact long term care could have on their family.

• Respondents are most likely to turn to their savings to pay for long term care expenses and are less likely to turn to money from friends and family. They would be willing to give up a lot to pay for their long term care, but most would not be willing to go into debt.

• Those who have already purchased long term care insurance are much more confident that they are prepared and are less likely to get drained financially, have to depend on family for help, or to feel guilty.

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Detailed Findings

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Respondents aren’t sure if they will need long term care at some point in their lifetime, yet they believe that

between 25% and 75% will.

1

9

Many Respondents Aren’t Sure If They Will Need Long Term Care at Some Point in Their Life

B-1. What is the likelihood that you will need long term care at some point in your life? Please use a scale from 1 to 5 where “1” means “very unlikely” and “5” means “very likely.”B-2. Why do you say that?

10

There were no significant

differences based on age.

Primary reason given: can’t predict the

future/life is uncertain

Primary reasons given: in good health, family

history

Primary reasons given: everyone will

eventually need it, people are living

longer, family history, healthy problems

Those with Direct Experience Overseeing a Loved One’s Long Term Care Are Slightly More Likely to

Think They Will Need Long Term Care

B-1. What is the likelihood that you will need long term care at some point in your life? Please use a scale from 1 to 5 where “1” means “very unlikely” and “5” means “very likely.”

Most Respondents Think That Between 25% and 50% of Americans Will Need Long Term Care at Some Point

in Their Lifetime

B-3. What percentage of Americans do you believe will need long term care at some point in their lifetime?

12

78%

Seven in Ten Think That Between 25% and 75% of Adults Aged 65 or Older Currently Need

Long Term Care

B-4. And what percentage of Americans aged 65 or older do you believe currently need long term care?

13

69%

Respondents want/expect a different long term care situation than their loved one had. The majority of respondents want to stay in their own home if they need long term care – preferably with professional

care – but about half report that their loved one was in a nursing home and those who did receive in-home

care were more likely to get that care from a loved one than a professional.

2

14

The Majority of Respondents Want to Stay in Their Own Home If They Need Long Term Care – Preferably with Professional

Care; Only a Tenth Want to Go to a Nursing Home

B-6. Imagine that you need long term care. Which of the following would be your preference for receiving that long term care?

15

Preference does not vary significantly based on age or

type of care their loved one received.

78%

Yet, Half of Those with Experience Overseeing Someone’s Long Term Care Report Their Loved One

Was in a Nursing Home/Assisted Living Facility

C-11. What type of long term care did/does that person receive? If he or she received different types of care during different periods of his or her illness, please check all that apply.

16

Recall, respondents would prefer to be

cared for by a professional.

Asked only of those with direct experience

Four in Ten of Those with Indirect Experience Report the Care Recipient Was in a Nursing Home

C-24. What type of long term care did/does that person receive? If he or she received different types of care during different periods of his or her illness, please check all that apply.

17

Recall, respondents would prefer to be

cared for by a professional.

Asked only of those with indirect experience

About three-quarters of respondents believe that their lifestyle would change substantially if they need long term care – and most of those with experience overseeing long

term care report that the care recipient’s lifestyle did indeed change. Lifestyle change predictions do not vary based on whether one has experience overseeing long term care, but they do vary based on how much their

loved one’s lifestyle changed.

3

18

About Three-Quarters of Respondents Believe That Their Lifestyle Would Change Substantially If They

Need Long Term Care

C-2. To what extent would your lifestyle change if you need long term care? Please use a scale of 1 to 5 where “1” means “would not change at all” and “5” means “would change a lot.”

19

73%

Lifestyle Change Predictions Does Not Vary Based on Whether One Has Experience Overseeing Long Term Care, but It Does

Vary Based on How Much Their Loved One’s Lifestyle Changed

C-2. To what extent would your lifestyle change if you need long term care? Please use a scale of 1 to 5 where “1” means “would not change at all” and “5” means “would change a lot.”

Graph just shows those with direct experience.

Most Respondents Who Have Experience Overseeing the Long Term Care of a Loved One Say That Their

Loved One’s Live Changed Significantly

C-13. To what extent did the lifestyle of your loved one change? Please use a scale of 1 to 5 where “1” means “did not change at all” and “5” means “changed a lot.”

21

83%


Likewise, Most of Those Who Have Indirect Experience Overseeing Someone’s Care Report

That the Care Recipient’s Lifestyle Changed

C-26. To what extent did the lifestyle of the care recipient change? Please use a scale of 1 to 5 where “1” means “would not change at all” and “5” means “would change a lot.”

22

74%


Most of Those with Indirect Experience Say That If They Need to Oversee the Long Term Care of a Loved One in the Future,

They Would Model It After the Behavior They Observed

C-27. To what extent do you agree with each of the following statements? Please use a scale of 1 to 5 where “1” means “strongly disagree” and “5” means “strongly agree.”

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About half think the lifestyle of their family would change if they need long term care. Those who

experienced a lifestyle change themselves when overseeing the long term care of a loved one – or who watched a partner/friend/relative experience a lifestyle

change when overseeing the care of a loved one – recognize the impact that it could have on their family.

4

24

About Half Think the Lifestyle of Their Family Would Change If They Need Long Term Care

C-3. To what extent would the lifestyle of your family change if you need long term care? Please use a scale of 1 to 5 where “1” means “would not change at all” and “5” means “would change a lot.”

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52%

Those Who Experienced a Lifestyle Change Themselves When Overseeing the Long Term Care of a Loved One Recognize the

Impact That It Could Have on Their Family


Graph just shows those with direct experience.

Likewise, Those Who Saw a Loved One’s Lifestyle Change When Overseeing Someone’s Care Are More Likely to Recognize the

Potential Impact on Their Family


Graph just shows those with indirect experience.

About Half Believe That the Lifestyle of They and Their Family Would Change If a Close Family Member

Needed Long Term Care

C-28. To what extent would the lifestyle of you and your family change if a close family member needed long term care?

28

Question was not asked of those with direct experience

overseeing the long term care of a loved one.

49%

Asked only of those without direct experience

Those Who Have Indirect Experience Watching Someone Else Oversee Someone’s Long Term Care Are More Likely to Recognize the Potential Impact

C-28. To what extent would the lifestyle of you and your family change if a close family member needed long term care?


About Half of those with Direct Experience Overseeing a Loved One’s Long Term Care Say That Their Own

Lifestyle Changed Significantly as Well

C-14. To what extent did your lifestyle change? Please use a scale of 1 to 5 where “1” means “did not change at all” and “5” means “changed a lot.”

30

47%


And About Half of Those with Indirect Experience Say the Lifestyle of the Caregiver Changed as Well

C-25. To what extent did the lifestyle of your partner/friend/relative change? Please use a scale of 1 to 5 where “1” means “would not change at all” and “5” means “would change a lot.”

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48%


Less than half have made plans to ensure they have sufficient funds to cover long term care expenses, yet, two-thirds say that it is important to plan for long term care needs. Older respondents, those with substantial

assets, and those who think it is likely that they will need long term care are more likely to have already

established a plan.

5

32

Less than Half Have Made Plans to Ensure They Have Sufficient Funds to Cover Long Term Care Expenses

B-7. Have you made plans to ensure that you will have sufficient funds to cover long term care expenses should the need arise?

33

Those who think they will need long term care are

more likely to have planned for it.

Yet, Two-Thirds Say That It Is Important to Plan for Long Term Care Needs

B-8. How important is it to plan for long term care needs? Please use a scale of 1 to 5 where “1” means “not at all important” and “5” means “very important.”

34

65%

Those who think they will need long term care are much more likely to think

that planning for long term care needs is

important.Women are slightly more

likely to say that it is important to plan for long

term care needs.

Those with Direct Experience Overseeing a Loved One’s Care Are More Likely to Have Already Made

Plans for Their Own Long Term Care


Likewise, Those with Direct Experience Overseeing a Loved One’s Long Term Care Are More Likely to Think

Planning for Long Term Care Needs Is Important


Not Surprisingly, Older Respondents Are More Likely to Have Planned for Long Term Care Needs


Gen X’ers Are Less Likely Than Boomers and Silent Generation to Think That Planning for Long Term

Care Needs Is Important


Those with Substantial Assets Are Also Much More Likely to Have Planned for Long Term Care Needs and Slightly More Likely to Think That Planning Is Important


It Does Not Appear as Though Many Respondents Spend Time Worrying About Long Term Care Expenses, Yet Less Than Half

Are Confident That They Have Planned for Long Term Care Costs


40

Men are slightly more likely than women to say they are confident and

not worried.

Women are slightly more likely to feel guilty.

Those Who Have Direct Experience Overseeing the Care of a Loved One Feel More Confident in Their

Long Term Care Planning Preparation

C-7. To what extent do you agree with each of the following statements? Please use a scale of 1 to 5 where “1” means “strongly disagree” and “5” means “strongly agree.” I am confident knowing that I have planned for long term care costs if the need arises.

Those with No Experience with Long Term Care Are Less Worried About It Right Now

C-7. To what extent do you agree with each of the following statements? Please use a scale of 1 to 5 where “1” means “strongly disagree” and “5” means “strongly agree.” I am not worried about long term care at all right now.

Slightly More Than Half Have Discussed Planning for Long Term Care Needs with Their Spouse, Yet a

Quarter Have Not Discussed It with Anyone

B-9. With which of the following have you discussed planning for long term care needs? Please select all that apply.

43

Asked only of internet respondents

Those with Direct Experience Overseeing a Loved One’s Care Are Also More Likely to Have Discussed

Planning with Others

B-9. With which of the following have you discussed planning for long term care needs? Please select all that apply.


About 4 in 10 Have Already Increased Savings and a Fifth Say They Have Purchased Long

Term Care Insurance

C-1. Which of the following have you done or do you anticipate doing to prepare for the potential cost of long term care if the need arises? Please indicate if you have already done it, if you anticipate doing it at some point in the future, or if you do not anticipate doing it.

Older respondents, those with more

assets, and those who think they will

need long term care are more likely to

have already increased savings

and purchased long term care insurance. Women are no more likely to have done these but are more likely to anticipate

doing them.

Some say that they have/will also increased investments and purchased

other types of insurance (e.g., life, disability, etc.).

Those with Direct Experience Overseeing the Care of a Loved One Are Slightly More Likely to Have Done and

Anticipate Taking Specific Actions

C-1. Which of the following have you done or do you anticipate doing to prepare for the potential cost of long term care if the need arises? Please indicate if you have already done it, if you anticipate doing it at some point in the future, or if you do not anticipate doing it.

Increase savings

Get LTC insurance

Sell assets

Respondents are most likely to turn to their savings to pay for long term care expenses and are less likely to turn to money from friends and family. They

would be willing to give up a lot to pay for their long term care, but most would not

be willing to go into debt.

6

47

Respondents Are Most Likely to Turn to Their Savings to Pay for Long Term Care Expenses and Are Less Likely to Turn to Money from Friends and Family

C-4. Should you need long term care, which of the following sources would you use to pay for it? Select all that apply.C-5. Are you aware Medicaid payments to those 65+ are usually only available to those seniors who cannot afford to pay for long term care, and that qualifying for Medicaid requires you to spend down all of your assets, or declare bankruptcy?

48

50% of these say that they are aware they would have to declare bankruptcy and would be willing to do it, 40% were unaware and would not be

willing to do it, and the remainder were unaware but

would be willing to do it.

Those with Substantial Assets Are More Likely to Rely on Savings; Those with Lower Assets Are More Likely to Use Medicaid, Disability

Insurance, and Money from Friends and Family

C-4. Should you need long term care, which of the following sources would you use to pay for it? Select all that apply.

49

Among Those with Experience, Social Security, Savings, and Medicare Were the Primary Methods of

Paying for Long Term Care

C-16. How did you/your loved one pay for his/her long term care?

50


Respondents Would Be Willing to Give Up a Lot to Pay for Their Long Term Care, but Most Would Not

Be Willing to Go into Debt

C-6. Imagine that the need arose in which you needed long term care and you did not have sufficient funds to pay for that care, which of the following would you be willing to do to pay for that care? Please indicate if you would be willing to do it, if you would not be willing to do it, or if that response is not applicable to your situation (e.g., if you do not own a home, do not own a car, do not currently donate money to charity, etc.).

51

NOTE: Chart removes those who say a given item is not applicable.

There are no significant differences based on

asset size.

Half Recognize That Costs of Long Term Care Could Drain Them Financially; a Quarter Are Scared of Being a Burden to Their

Family, yet About a Fifth Would Expect Their Family to Help Them


52

About Half of Those with Experience Overseeing a Loved One’s Long Term Care Report That Their Loved One Took Less Vacations, Stopped

Going out to Dinner, and Cashed in Investments

C-17. Did your loved one have to do any of the following to pay for his/her long term care? Please indicate if he/she did it, if he/she did not do it, or if that response is not applicable to his/her situation (e.g., if he/she did not own a home, did not own a car, did not already donate money to charity, etc.).

53



And Slightly More Than a Third of Those with Direct Experience Say That Their Loved One Did Not Plan

Sufficiently and That Their Assets Were Depleted


54


A third fear that their loved ones have not sufficiently prepared for their long term care. With the exception of remortgaging or selling their home, selling their car, and

going into debt, respondents are willing to do a lot to help a family member in need of long term care. Most of those who helped their loved one pay for long term care did it

with their savings or by providing care to them themselves, but most did not feel a financial burden.

7

55

A Third Fear That Their Loved Ones Have Not Sufficiently Prepared for Their Long Term Care, Yet Few Are Nervous That They Will be

Burdened Financially for Their Long Term Care Expenses


56

Women are slightly more likely to agree with both

of these statements.

With the Exception of Remortgaging or Selling Their Home, Selling Their Car, and Going into Debt, Respondents Are Willing to Do a Lot to Help a Family Member in Need of Long Term Care

C-29. Imagine that the need arose in which a close family member needed long term care and they did not have sufficient funds to pay for that care, which of the following would you be willing to do to help them pay for that care? Please indicate if you would be willing to do it, if you would not be willing to do it, or if that response is not applicable to your situation (e.g., if you do not own a home, do not own a car, do not currently donate money to charity, etc.).

57



Most of Those Who Helped Their Loved One Pay for Long Term Care Did It with Their Savings or by

Providing Care to Them Themselves

C-18. You indicated that you helped your loved one pay for his/her long term care. Which of the following did you do to provide money for his/her care? Please indicate if you did it, if you did not do it, or if that response is not applicable to your situation (e.g., if you did not own a home, did not own a car, did not already donate money to charity, etc.).

58


Asked only of those with direct experience who

helped pay for their loved one’s care

Yet Few with Experience Say That Helping Pay for a Loved One’s Care Disrupted Their Life or That They Experienced a Financial

Burden Paying for Their Loved One’s Care

C-19 & C-27. To what extent do you agree with each of the following statements? Please use a scale of 1 to 5 where “1” means “strongly disagree” and “5” means “strongly agree.”

59



Almost everyone has heard of long term care insurance, but only about half are

familiar with the details. Respondents are most likely to associate nursing homes, assisted living facilities, and in-

home medical care with long term care insurance, and are less likely to think that it covers in-home non-medical

expenses, and doctor and hospital costs.

8

60

Almost Everyone Has Heard of Long Term Care Insurance, but Only About Half Are

Familiar with the Details

D-1. How familiar are you with long term care insurance? Please use a scale from 1 to 5 where “1” means “have never heard of it” and “5” means “very familiar.”

61

49%

86% of those who actually have long term

care insurance are familiar with the details, as compared to 39% of

those who do not.


Those with Direct Experience Overseeing a Loved One Are Much More Likely to Be Familiar with

Long Term Care Insurance

D-1. How familiar are you with long term care insurance? Please use a scale from 1 to 5 where “1” means “have never heard of it” and “5” means “very familiar.”


Respondents Are Most Likely to Associate Nursing Homes, Assisted Living Facilities, and In-Home Medical Care with Long Term Care Insurance

D-2. For which of the following expenses does long term care coverage pay? Please select all that apply.

63


Overall, There Is No Consensus on How Much Long Term Care Insurance Costs

D-3. Approximately how much per month do you believe long term care insurance costs for someone your age?

64


Yet, Older Respondent Do Think It’s More Expensive and Younger Respondents Less Expensive, so Their

Assumptions May Be Somewhat Accurate

D-3. Approximately how much per month do you believe long term care insurance costs for someone your age?


Only 10% say that they are likely to get long term care insurance within the next two years, yet four in

ten plan to get it at some point in their life. Those who have already purchased long term care

insurance are much more confident and are less likely to get drained financially, have to depend on

family for help, or to feel guilty.

9

66

Respondents Vary on What Age Someone Should Consider Getting Long Term Care Insurance; Only a

Handful Say “Never”

D-4. At what age should someone consider getting long term care insurance?

67


About Half Say That Everyone Should Consider Getting Long Term Care Insurance; Very Few Say That

No One Should

D-5. In your opinion, who needs long term care insurance? Please select all that apply.

68

Only 34% of those who say everyone should consider getting long term care insurance

actually have it themselves.


Only 10% Say That They Are Likely to Get Long Term Care Insurance Within the Next Two Years, Yet Four

in Ten Plan to Get It at Some Point in Their Life

D-6. How likely are you to purchase long term care insurance during the following timeframes? Please use a scale of 1 to 5 where “1” means “very unlikely” and “5” means “very likely.”


Those Who Have Already Purchased Long Term Care Insurance Are Much More Confident and Are Less Likely to Get Drained

Financially, Have to Depend on Family for Help, or to Feel Guilty


Predictions of how much long term care costs per month are somewhat accurate, yet vary dramatically from respondent to respondent. Respondents with direct

experience are split on whether or not they were aware of the full cost of care before they experienced it, but about half of those with direct or indirect experience say that their experience opened their eyes to the true cost of

care and that they will prepare better.

10

71

Predictions of How Much Long Term Care Costs Per Month Are Somewhat Accurate

B-5. On average, how much do you think each of the following options would cost per month for one person?

72


With the exception of those with direct experience

thinking that skilled nursing homes are more expensive,

there were no significant differences in predictions

based on experience overseeing long term care.

Yet, Specific Cost Estimates Vary Substantially from Respondent to Respondent

B-5.

Actual Expenses Are Somewhat in Line with Average Predictions

C-12. Approximately how much per month did/does each type of this person’s long term care cost?

74

Asked only of internet respondents with direct

experience

Please keep in mind that these costs are estimates by

the person overseeing the long term care and may or may not accurately reflect

the actual cost of care.

Prediction: $3,638

Yet, Respondents with Direct Experience Are Split on Whether or Not They Were Aware of the Full Cost of

Care Before They Experienced it

C-15. To what extent were you aware of the cost of long term care before you experienced it? Please use a scale of 1 to 5 where “1” means “not aware at all” and “5” means “fully aware.”

75

35%

44%


But More Than Half Say That Their Experience Overseeing a Loved One’s Care Opened Their Eyes to the True Cost

and That They Will Do a Better Job Preparing


76


And Slightly Less Than Half of Those with Indirect Experience Say That Watching Someone Oversee a Loved One’s Long Term Care Opened Their Eyes to the Cost and That They Will Prepare Better


77


Appendix:Respondent

Profile

78

Over Half Have Investable Assets of $200,000 or More

A-3. Which of the following categories best represents your total investable assets? By investable assets, we mean all of your savings and investments, but not personal property such as your home.

79

About Three-Quarters Have a Household Income of $100,000 or Greater

A-4. Which of the following categories best represents your total annual household income?

80

78%

Respondents Have a Wide Variety of Financial ProductsAbout a Fifth Already Have Long Term Care Insurance

A-5. Which, if any, of the following financial products/assets do you currently have? Select all that apply.

81

Asked only of online respondents

About Six in Ten Respondents Are Baby Boomers – The Rest Are Generation X or Silent Generation

DERIVED FROM A-2. In what year were you born?

82

Recall, respondents were screened to ensure that they

are between 40 and 70 years of age.

Gender Is Equally Split and Most Respondents Are Married or Living with Someone

E-1. What is your gender?E-4. What is your current marital status?

83

Slightly More Than Half Are Employed Full-Time, While Most of the Rest Are Retired; Most Have

College or Graduate/Professional Degrees

E-2. Which of the following best describes your employment status?E-3. What is the highest level of education you have completed?

84

Most Respondents Have Children but Many Are Over the Age of 18; Respondents Are Mixed in

Terms of the Status of Their Parents

E-5. Which of the following best describes your children? (Please check all that apply.)E-6. Are your parents currently living or deceased?

85

The Majority of Care Recipients Are Parents

C-8. You mentioned that you oversee/have overseen the long term care of a loved one. What is/was the relationship of that person to you? If you have overseen the long term care of multiple people, please think of the first person whose care you oversaw.

86

81%

Most Were Between 40 and 60 Years of Age When They Started Overseeing Their Loved One’s Care

C-9. What age were you when you started taking care of him or her?

87

Care Recipients Are Approximately Equally Split Between Those with Cognitive Impairments, Physical

Disabilities, and Chronic Illnesses

C-10. What medical conditions affected/are affecting the daily life of this person? Please select all that apply.

88

A Quarter of Respondents Who Have Indirect Experience Watched Their Mother Care

for Someone Else

C-20. You mentioned that you watched a partner/friend/relative oversee the long term care of an adult loved one. What is/was the relationship of the caregiver to you? If you have watched a partner/friend/relative oversee the long term care of multiple people, please think of the first person whose care you watched.

89

And the Most Frequent Care Recipient of Their Partner/Friend/Relative Is Also a Mother

C-21. And what is the relationship of the care recipient to your partner/friend/relative?

90

Most of Those with Indirect Experience Overseeing Long Term Care Say That They Started Watching

Someone Provide Care Between Age 40 - 60

C-22. What age were you when you started watching a partner/friend/relative oversee the long term care of that person?

91

Care Recipients of Their Partner/Friend/Relative Are Split Between Cognitive Impairments, Physical

Disabilities, and Chronic Illnesses

C-23. What medical conditions affected/are affecting the daily life of this person? Please select all that apply.

92

Documents

Lincoln Financial Lincoln Financial Life Stages Survey: Long-Term Care September/October 2010 LCN1102-205062