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Life Health > Long-Term Care Planning

Pacific Life to Change Long-Term Care Product Strategy

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Pacific Life says it will focus on selling long-term care benefits riders on cash-value life insurance policies, rather than life insurance policies with built-in LTC benefits.

The Newport Beach, California-based insurer is discontinuing the sale of Pacific PremierCare Choice whole life policies with LTC benefits.

The company is also ending the sale of Pacific PremierCare Advantage Universal Life Insurance With Long-Term Care Benefits policies.

The company said it will continue to service any policies with LTC benefits that are already in force.

Life insurers depend heavily on earnings on bond investments to support LTC benefits obligations. Bond rates have been low in recent years.

Pacific Life said the current environment makes offering life-LTC hybrid products that are both attractive and profitable difficult.

Greg Reber, chief distribution officer for Pacific Life’s life insurance business, said, in a comment included in the strategy change announcement, that the company believes the market for chronic health and LTC riders on cash-value life policies, such as whole life policies and universal life policies, has great potential.

“Pacific Life remains committed to the long-term care market as we continue to recognize U.S. consumers’ large, unmet need in this area,” Reber said.

The Background

Long-term care planning specialists say traditional, stand-alone long-term care insurance policies continue to be the most efficient way to protect an insured against catastrophic long-term care risk.

But many consumers object to paying high prices for coverage they might not use, and insurers have responded by combining LTC benefits with life insurance, in life-LTC hybrid products.

LIMRA has reported that sales of life-LTC hybrids fell 23% between 2019 and 2020, to $3.7 billion.

The number of hybrid policies sold fell 7%, to 421,000.

LIMRA suggested that the one driver of the decrease was the effects of the COVID-19 pandemic and social distancing rules on efforts to sell a complicated product without the ability to hold face-to-face client meetings.

 (Image: Shutterstock)