Meeting the needs of the over-50 consumer takes understanding life changes and enabling empowerment

Before launching into a snapshot of the 50-plus consumer, Ryan Wilson, Strategic Policy Advisor, Public Policy Institute, AARP, had to check whether he had his reading glasses with him. Partly in jest but partly serious, it was an example that our national demographic is changing at a rapid pace, promising significant changes for marketers in all fields, including insurance.

Wilson was one of three 2009 Exchange panelists “Addressing the insurance needs of the 50-plus consumer.” Other panelists included Brian Atchinson, president & CEO, Insurance Marketplace Standards Association (IMSA), and Stephanie Chappell, corporate gerontologist, The Harfford. ICAE President Barb Fitch moderated.

Big changes ahead – personal and societal

As the “baby boomer” demographic continues to age, it will spell big changes for its individual members and American society in general. For one thing, Wilson noted that by age 85, women will outnumber men by more than two to one. For another, there will be a wide disparity among income levels, with the average net worth of the top 1 percent averaging something like $13 million, while the average net worth of the other 99 percent is likely to be around $150,000. Even more problematic is the fact that up to a quarter of all 50-plus consumers feel lost when it comes to money management, with too many choices and not enough trusted advice.

In addition to money issues, the 50-plus cohort will face rapidly changing social situations, as they discover more time for family interactions, hobbies (if they have them), and other activities less frequently engaged in during younger and more responsibility-laden times of their lives. Goals change. Instead of worrying about moving up to the next house or the newer car, thoughts turn to personal legacy issues as well as taxes and educational expenses for college-age children.

Then, there are the physical changes, a major one being hearing loss. More than 60 percent of those over 65 and older have some degree of hearing loss, although the problem is frequently not acknowledged or is met with outright denial. Often, the need to repeat oneself to an individual over age 65 may be mistaken as a sign of incipient dementia.

Vision may be equally problematic. About 17 percent of those over age 40 are known to have cataracts, while fully 25 percent are nearsighted. About 7 percent of those over 80 are blind. All of which has implications for their ability to read and understand applications and other documents involved in the sale of insurance and annuity products.

Decreasing mobility is another issue, as hand rails, chairs with arms and even “walkers” become more frequent companions. For employers, ramps to and from parking lots may be required, as might sufficient room in the office to turn around wheelchairs.

And then there is the perennial question of mental ability. As Wilson noted: “The ability to think and be cognizant does tend to diminish somewhat over time. This clearly can become an issue when a client cannot seem to remember essential information during a sales situation.”

Among the results of all of these factors may be a tendency to depend more heavily on the advice and assistance of perceived experts. Indeed, older Americans, like most of us, don’t really understand the financial terms of the products and services they have. Wilson noted that in one recent survey:

• 30 percent of respondents said they’ve made an investment they regretted because they didn’t understand it
• 57 percent do not believe they understand diversification well enough to explain it to a friend or coworker
• 50 percent believe financial professionals use “complicated jargon” to distract people from focusing on the fees they will be charging
• 60 percent do not read financial literature because it is too hard to understand

Fortunately, there are increasing numbers of professionals available to help with these and other issues of aging, including specialized elder law, tax or probate attorneys, eldercare case managers, social workers, geriatric money managers and residence transition specialists.

Click here to view Wilson’s presentation.

‘Who’s preying on your grandparents?’

Brian Atchinson of the Insurance Marketplace Standards Association (IMSA) led off his portion of the panel with the provocative headline of a recent New York Times business section feature headline.

“One of the main problems confronting older Americans is that they are the favored victims of swindlers,” Atchinson said. “The largest concentration of scam artists can be found in Florida, which is where the money is, both Florida and to a lesser degree Arizona.”

Fortunately, IMSA, AARP and other senior watchdogs are increasingly on the alert to help seniors, regulators and law enforcement assure the highest standards of marketplace conduct. IMSA is a voluntary, independent market conduct and compliance standards-setting and self-regulatory organization serving the life insurance marketplace. Launched in 1996, IMSA establishes national standards recommending how life insurers should market, sell and service individually sold annuities. Companies must undergo a rigorous independent assessment and must renew their IMSA certification every three years. IMSA-qualified companies operate in all 50 states.

Atchinson identified a number of current marketplace issues of particular interest to IMSA and consumers, including:

• STOLI (Stranger Owned/Originated Life Insurance)
• Suitability of sales of annuity products
• Product replacement activity
• Disclosures to consumers regarding annuities and life products
• Establishing a fiduciary standard of conduct for all sellers of life insurance, annuities and similar products

Click here to view Atchinson’s presentation.

Seizing opportunities to help an aging population

Stephanie Chappell of The Hartford wrapped up the panel presentation with a job title that was a first for an ICAE panel. She is one of The Hartford’s team of corporate gerontologists, nine of whom hold advanced degrees. Why would an insurance carrier employ so many scholars with such a specialized field of study?

“The Hartford remains dedicated to serving the market of older insurance customers,” Chappell said. “Twenty-five years ago we partnered with AARP to sell auto and homeowners insurance to their members. That commitment is as strong today as it has ever been.”

During that quarter century, Chappell’s team has learned that stereotypes of what constitutes the “older market” can be misleading and off the mark.

“The older we get, the fewer physical resources we have and the longer it takes us to recover,” Chappell said. “That is true of all of us, but there is a tremendous amount of diversity within that population.

“For instance, it is a fact that only about 10 percent of people over age 65 have any kind of dementia,” she said, “which means that 90 percent of older Americans do not have significant impairment in memory and cognition. However, our nervous systems do slow down, and what looks like cognitive problems may just be the challenge of sifting through 70 years of memories. Simple daily activities can get harder and people often need a little extra help.”

At The Hartford, that understanding of the needs of older, and even not so old, Americans has resulted in the creation of new business solutions. One of them is RecoverCare, a product that pays up to $2,500 per accident for specialized assistance in a variety of areas associated with giving the injured person that little extra help he or she may need to recover from an event such as a fall in the home. Customer service representatives who provide assistance under RecoverCare receive specialized training from one of the company’s gerontologists and must complete a certification program.

The Hartford is also engaged in original research and public education through The MIT AgeLab research program. In addition, the company maintains a special Internet blog called “In the Driver’s Seat,” which addresses the driving issues faced by older drivers and offers recommendations for safer driving.

“Everything we do is about providing empowerment and giving people the resources they need to solve problems as they develop,” Chappell said. “The last thing we want to do is to be patronizing to seniors. We want to help them take control of their lives and get the most out of this stage of their lives.”

Click here to view Chappell’s presentation.

Contact Info:

Brian Atchinson
President & CEO
Insurance Marketplace Standards Association (IMSA)
240.744.3020
brianatchinson@imsaethics.org
www.imsaethics.org

Stephanie Chappell
Corporate Gerontologist
The Hartford
860.620.6883
stephanie.chappell@thehartford.com
www.thehartford.com

Ryan Wilson
Strategic Policy Advisor
AARP Public Policy Institute
202434.3918
trwilson@aarp.org
www.aarp.org

Barbara Fitch
2nd VP – Market Conduct & Compliance
National Life Group
802.229.3112
bfitch@nationallife.com
www.nationallife.com