The combination of aging baby boomers and spiraling long-term care (LTC) costs has created an environment that should be ideal for long-term care insurance (LTCI) sales, but that’s not happening.
Sales of individual LTCI policies have been flat or negative in recent years.
Several insurers have raised premiums, reduced benefits or tightened underwriting standards; other insurance companies are leaving the market entirely.
Should LTCI advisors follow suit and focus on other products or is there a silver lining in the LTCI-market clouds?
According to LIMRA, LTCI sales results in 2011 were mixed: premiums increased by 4 percent but the number of lives (i.e., new policy sales) fell by 2 percent.
The first half of 2012 was weak, as well: lives dropped by 7 percent versus the same period last year to roughly 108,000.
Premiums were 2 percent lower for the same period.
Results among the top insurers are mixed, though.
Eight companies reported significantly lower business—down 20 percent or more—for the first half of this year. But new premium for the top-five carriers combined grew 15 percent through the second quarter of 2012.
Sales of hybrid or combination life policies remained strong. In 2011, these products grew 56 percent, representing the third consecutive year of double-digit growth, according to LIMRA’s 2011 Individual Life Combination Products Annual Review.
Total new premium for life combination products reached $2.2 billion in 2011, approximately 13 percent of total individual life insurance new premium. More than 72,000 combination policies were sold in 2011, which make up approximately 16 percent of all long-term care insurance policies and contracts sold in 2011.