After three consecutive years of growth, total new premium for individual life combination products dropped 2% to $4.3 billion in 2018, according to LIMRA’s 2018 Individual Life Combination Products Annual Review.
There were 404,000 policies sold in 2018, a 2% increase compared to 2017.
Life combination products provide life insurance coverage with long-term care or chronic illness coverage, an attractive value proposition to consumers, according to LIMRA consumer research. In 2018, combination products represented 27 percent of the overall U.S. individual life insurance market.
“The decline in total premium is a result of more companies shifting to introduce recurring premium options. To put this into perspective, 61% of policies were sold on a recurring premium basis in 2011. By 2018, 93 percent of policies sold were recurring premium,” said Daniel McAllen, associate analyst, LIMRA Insurance Research. “This shift suggests a growing movement to attract mass-affluent buyers who may not have the financial wherewithal to invest a large lump sum all at once but still want the dual protection these products offer.”
On a product level, whole life (WL) combination premium experienced the largest growth in 2018, up 34%, compared with 2017 results. WL held 27 percent of the combination market in 2018, up 7 percentage points from 2017. Variable universal life (VUL) combination premium also improved, growing 5% in 2018. VUL’s market share remained steady at 5%.
Universal life (UL) combination premium and term combination premium both declined 11%, compared with prior year. UL combination premium continues to dominate the market, with 66% market share, but that is down 7 percentage points from 2017. Term combination premium held 2% of the combination product market.
Long-term care (LTC) acceleration riders and chronic illness (CI) acceleration riders equally held 41% of the premium market share in 2018. LTC extension products held the remaining 18% of the market by premium but continued to hold the largest portion of policies at 64%.
According to LIMRA data, more than half of Americans (53%) are worried about affording long-term care services if needed. Six in 10 consumers would consider purchasing a combination product to offset long-term care costs they may face in retirement.