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A shift in how U.S. residents pay for products that combine life insurance with long-term care (LTC) benefits may have disrupted U.S. individual life-LTC sales figures in 2018.

LIMRA analysts talk about the effect of the payment shift in their latest U.S. individual life-LTC market report, which is based on a survey of life-LTC policy issuers.

(Related: Life-LTC Hybrid Sales Soar: LIMRA)

LIMRA calls its report an “individual life combination product” report, because it combines data for individual life insurance policies that provide true long-term care (LTC) benefits with data for individual life policies that are designed to pay benefits when an insured suffers from a chronic illness.

About 64% of the policies included in the survey come with provisions that accelerate the payments of benefits when the insured suffers from a chronic illness, rather than a benefit related to a need for long-term care.

Sales Results

LIMRA found that the number of “individual life insurance combination” policies sold in the United States increased 2% in 2018, to 404,000.

The total amount of new premium revenue associated with those combination policy sales fell 2%, to $4.3 billion.

In 2017, LIMRA reported an 18% increase in the amount of new premium revenue associated with new combination policy sales.

Payment Shift

Traditionally, most people who bought traditional, stand-alone long-term care insurance paid their premiums on a monthly or annual basis.

Life-LTC hybrid purchasers often paid for the hybrid policies with one large premium payment.

Daniel McAllen, an associate analyst at LIMRA’s LIMRA Insurance Research unit, said in a statement about the new survey results that he believes more insurers are adding recurring premium payment options for life-LTC and life-chronic illness policies.

Total new premiums may look a little soft partly because so many purchasers are now paying for their coverage over time, rather than making one large premium payment, McAllen said.

Product Types

LIMRA found that sales of universal life-based combination products fell 11%.

Sales of whole life-based combination products increased 34%.

Resources

A copy of the LIMRA life-LTC combination products survey summary is available here.

— Read LTC Product Sales Rise 12%: LIMRA, on ThinkAdvisor.

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