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Currently showing: Funding longer lives > Long-term care

17 Nov 15 05:33

Ageing populations will be a defining characteristic of most Asian societies in the coming decades. Attention is commonly focused on providing adequate retirement income and healthcare, but preparing for the future care needs of an ageing population is equally important. As the number of elderly rises, so does the need to prepare for their future care needs. This includes the funding for and provision of relevant care services.

The small size of existing long-term care (LTC) insurance market in Asia belies the scale of the issue. In each of the next ten years, roughly 15 million Asians will reach the age of 65. That is a tremendous burden on households and governments to provide adequately for their future care needs.

We are deeply concerned about this impending challenge. We started by asking over 6,000 consumers in six key Asian markets (China, Hong Kong, Japan, Korea, Singapore and Taiwan) about their perception and need for care services.

According to this latest Swiss study Spotlight on care solutions in Asia, most consumers have no confidence in their government’s ability to fund future care needs. As such, there is demand for care solutions in terms of private insurance or financial products which provide cash, finance and/or services to those with personal care needs. But not knowing how to initiate the purchase of care solutions and procrastination are major hurdles in the insurance purchasing decision. We should also note that consumers put great emphasis on “peace of mind” and “reducing dependency on family” as major reasons to buy care solutions.

Personally, as the sole breadwinner of my family, I have always been conscious of my family's care needs. With two sons still studying and not wanting to depend on them for my retirement and future care needs, I definitely would want to find a care solution that would give me "peace of mind".

According to Spotlight on care solutions in Asia report , affordability and products that meet consumer requirements are the main considerations in a care solution purchase decision, while brands matter less. Consumers are receptive to value-added services like medical check-ups and emergency services, but there is a limit to how much extra they are willing to pay for these services, and this varies by market.

In general, consumers like me would prefer care solutions that:

- are bundled with other life and health policies, either as a rider or as part of the primary cover package, rather than bought as standalone policies;
- offer pay-outs and collect premiums on a monthly basis;
- offer long-duration cover (a consumer’s entire remaining life-span);
- are affordable and customized to their needs; and
- are available through a range of distribution channels, including agents, online, hospitals and large medical groups.

The region’s insurance industry is a latecomer in terms of supporting people’s future care needs. The availability of conventional long-term care insurance is limited, with a small market observed, mainly in Japan. There are good reasons to doubt whether conventional LTC products will be able to meet the needs of
Asian consumers.

With the rapidly ageing population, the industry needs to step up its efforts to help people become better prepared. In particular, insurers should expand the scope of their current product offering which focuses heavily on paying for advanced-stage care needs. Re-designing products that incorporate value propositions along the care continuum can be more appealing for many Asian consumers including myself. What is your take on this? Do you have ideas to share?

Category: Funding longer lives: Long-term care, Longevity risk, Pension/retirement, Social contract

Location: Hong Kong Island, Hong Kong

1 Comment

Alicia Montoya - 17 Nov 2015, 7:39 a.m.

Absolutely! In fact, I'd even consider buying LTC for my parents as a gift. So how could we package it to make it cool? We need to change its image from a "nurse me when I can no longer care for myself" to a "cooler lifestyle for longer" enabler.

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