LIMRA suggests life insurance combinations may help fill void of long-term care

By Susan Yellin | November 10 2017 09:45AM

Photo: Freepik

Americans may value long-term care insurance, but research from LIMRA indicates that stand-alone individual long-term care (LTC) insurance sales have declined 60 per cent since 2012.

LIMRA says declining sales are mainly due to cost concerns from consumers and profitability concerns from carriers. Fewer carriers are willing to take on the risk associated with stand-alone products now than when they first appeared in the market.

Still, while this product declines, the need for LTC services is set to increase as more people enter retirement, LIMRA said in a statement.

More than half of Americans will require LTC services during their lifetimes

LIMRA data suggests there will be 82 million Americans in retirement by 2040, and U.S. government data estimates that 52 per cent of those 65 and older will need LTC services during their lifetime. 

With only seven per cent of consumers over age 50 having LTC coverage, LIMRA suggests filling the void through a combination of products, such as life insurance and annuity products with an LTC rider.

LIMRA says life insurance combination products have seen growth over the last eight years. Total premium sales in the combination market hit US $3.6 billion in 2016 and represented 17 per cent of industry-wide premium sales (excluding excess premium).

Consumers will get a benefit even if they don’t need LTC

According to LIMRA, one of the top reasons consumers find these products appealing is because they receive a benefit even if they don’t need the long-term care. Six in 10 consumers say they would consider a combination product to mitigate long-term care costs.

Similarly, sales of annuity with long-term care riders have increased over the past five years.