The Sandwich Generation and Long-Term Care Insurance

Sandwich Generation

For many people in my generation, we have a picture of what we want our financial lives to look like as our children leave home, and we enter the second half of our working lives. 

In reality, we’ve found that our parents’ pensions and Social Security benefits may not cover their living costs, especially if they have chronic health issues, as 1 out of 4 Americans do (the number rises to three in four Americans age 65 and older). At the same time, we have children who are still living at home or we’re paying an average of $26,500 a year for college – or for those using student loans, graduating with an average of $28,650 in student loan debt.

We are in what demographers call the sandwich generation. We find ourselves simultaneously supporting our parents and our children, financially and emotionally. And we’re frequently supporting them from far away.

study by MassMutual looked at the state of the American family, with specific insights on the sandwich generation. Here’s what they found. In the sandwich generation:

  • 47% spend an average of two hours a day caring for parents or in-laws.
  • 49% manage their parents or in-laws finances. 
  • 31% are financially responsible for parents and in-laws.

And perhaps the most compelling statistic – 80% of sandwich generation families say financial security is at the heart of the American Dream. That means, they want and need to achieve financial independence and enjoy a comfortable retirement.

The strain on adults in this generation is only a challenge that will increase. Roughly 10,000 Baby Boomers will turn 65 today, and about 10,000 more will cross that threshold every day for the next ten years. Plus, people are living longer, increasing the chances that they will need some type of care in their last decades of life.

November is Long-Term Care Awareness Month. Long-term care insurance provides benefits that can help relieve the emotional and financial burden of caring for aging parents or loved ones.

When long-term care insurance was first introduced, the product was so popular that it created some challenges in pricing assumptions that failed to appreciate what the true costs of coverage would be. But we know it’s a solution that is valued by many consumers. As of 2014, insurers paid out more than $100 billion in long-term care insurance claims and currently are paying over $9 billion a year. Very few consumers drop their coverage. 

Today, the life insurance industry is thinking creatively about how we address the issues facing the sandwich generation, and we are working hard to create accessible and affordable products that meet the needs of people who want to age comfortably, and in a place that they choose.

As Congress looks to address the needs of American citizens as they age, we cannot overlook long-term care insurance as an important component in financial security. Health insurance seldom pays for long-term care services and the government programs only provide limited coverage. Americans need access to long-term care insurance and the life insurance industry stands ready with solutions. 

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Chuck Piacentini

Chuck Piacentini

Chuck Piacentini served as Vice President & Chief Counsel, Office of the General Counsel at the American Council of Life Insurers (ACLI) until June 2020. He was responsible for industry advocacy on long-term care insurance, supplemental benefits and group insurance issues before federal and state policymakers and at the National Association of Insurance Commissioners (NAIC).