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Sales of Life Policies With LTC Benefits Soar: LIMRA

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What You Need to Know

  • Single-premium policies accounted for just 3% of the new life-LTC combo policy sales.
  • The total amount of new premiums paid for new combo policies increased 22%, to $4.3 billion.
  • A controversial Washington state LTC program contributed to the hybrid policy sales growth.

A controversial Washington state long-term care benefits program led to a big increase in 2021 sales of life insurance policies that offer LTC benefits.

The number of new individual life-LTC combination policies sold increased 39% from the number sold in 2020, to more than 558,000, according to new data from LIMRA.

The total amount of premiums paid for those policies increased 22%, to $4.3 billion.

The average amount of premiums paid per new individual life-LTC combination policy fell 12%, to about $7,700.

What It Means

The number of clients who are using stand-alone long-term care insurance, or LTCI, to protect themselves against long-term care risk may be falling, but the percentage who are using life insurance, annuities or other arrangements to prepare might be high — and growing.

Any comprehensive analysis of a client’s protection arrangements needs to include an analysis of any LTC benefits or related benefits that their life insurance policies might offer.

The Washington State Effect

State lawmakers disrupted Washington’s private LTCI market in 2021 by approving one law that was going to fund a new, universal, long-term care program with a 0.58% payroll tax, and a second law that was going to let workers avoid the LTC program payroll tax by buying either approved stand-alone LTCI policies or approved life-LTC combination policies.

Consumers flooded LTCI issuers and life-LTC combination product issuers with applications.

Most issuers suspended sales in Washington state, in part because of concerns that many of the applicants from the state would drop their LTCI or life-LTC coverage once they thought they were safe from having to pay the new LTC program payroll tax.

The state has delayed implementation of the LTC program because of implementation concerns.

Karen Terry, a LIMRA executive, said in a comment on the new life-LTC hybrid data that the Washington LTC program did help increase 2021 combination product sales.

Payment Schedules

In the past, many consumers used one big payment to pay for life-LTC combination policies.

Over the years, the percentage of consumers using multiple premium payments to pay for combination products has grown. In 2021, recurring-premium policies accounted for 97% of new life-LTC combination product sales, according to LIMRA.

(Image: adempercem/Shutterstock)


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