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Life Health > Long-Term Care Planning

Clients' Universal Life Policies Might Contain a Retirement Planning Boost

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What You Need to Know

  • Milliman actuaries have based their statistics on survey responses from 23 insurers.
  • The participating insurers reported a total of 412,233 individual universal life policies of all kinds in 2020.
  • About half of the traditional universal life policies sold in the survey period included long-term care riders.

Many clients who come in with newly purchased individual life insurance policies may have something extra in their portfolios: long-term care benefits.

Two actuaries at Milliman — Carl Friedrich and Michelle Krysiak — have included a section on long-term care riders in a new report on sales of U.S. individual universal life, indexed universal life and variable life policies in 2020, and in the first three quarters of 2021.

The 23 insurers that participated in the latest Milliman UL sales survey reported selling a total of 412,233 of the three major types of UL policies in 2020.

The issuers were on track to increase the number of UL policies sold by about 13% in 2021.

Long-Term Care Benefits

Some consumers use long-term care riders attached to UL policies to pay for long-term care services.

The Milliman actuaries indicated use of long-term care benefits riders by showing the percentage of individual UL sales associated with policies with long-term care riders.

Here’s the share of individual UL sales premium, for the first three quarters of 2021, that came from the sales of policies with long-term care riders, broken down by UL product type:

  • Traditional UL: 49.8%
  • Indexed UL: 22.5%
  • Variable UL: 33.4%

What It Means

If you helped clients buy their life insurance policies, you should know what’s in there.

If clients come in with individual life insurance policies purchased without your help, you may want to review the policies carefully, to see whether any long-term care benefits available through the policies can complement the annuities, employer plans, nonqualified saving and investment arrangements, long-term care insurance policies and other resources the clients might have.

Universal Life Basics

All three major types of universal policies are designed to build cash value and provide protection over the course of an insured’s life.

Crediting rates for a traditional universal life policy are guaranteed and provided by the issuer’s own “general account” investments.

An indexed UL policy provides a combination of a fixed general account component and an adjustable crediting rate component tied to the performance of an investment index.

A variable universal life policy is a security and has a crediting rate tied to the performance of an investment portfolio.

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