“Historically, individual products have emerged relatively unscathed from the effects of a recession,” says Karen Fisherkeller, LIMRA associate analyst, Group and LTC Product Research. Now, she says, all product lines are taking a hit, and LTCI in particular appears “vulnerable.”
“The economic downturn had a significant impact on LTCI sales during the second half of 2008,” Fisherkeller says.
Long term care insurance carriers now say they are struggling to convince consumers of the need to protect against the risk imposed by LTC needs. Individual LTCI premium fell 23 percent in the fourth quarter, ending 2008 down 7 percent, according to LIMRA’s “Individual Long-Term Care Sales” survey.
“Growth from the beginning of 2007 through mid-year 2008 gave the industry reason to believe that it had turned a corner following four years of declining sales,” Fisherkeller continues. “While current sales are discouraging, the industry remains hopeful that as economic times improve, so will the market.”
Unlike 2007, which racked up $650 million in new individual LTCI sales, 2008 growth reversed, ending with just over $600 million. The number of new individual LTCI buyers was down 7 percent at 277,000. LIMRA estimates these numbers near those in the 1990s.