LIMRA: Life Combination Products Sales Rise, But Premium Drops
June 17, 2015 by Dennis Gorski
Sales of combination life insurance products continued to grow but new premium paid for these hybrid policies fell in 2014, a LIMRA study concluded.
New combination life product sales registered just shy of 100,000 last year, up 4%, but premium of $2.4 billion was off 9% from 2013, LIMRA’s “2014 Individual Life Combination Products Annual Review” showed. For several years leading up to 2014, premium had been registering double-digit growth, LIMRA noted (Best’s News Service, May 17, 2013).
“The decline in new premium is mainly due to a shift from single-premium products to limited-pay products,”Catherine Ho, LIMRA product actuary, said in a statement. “This trend is seen throughout the U.S. individual life insurance market, and is not specific to combination products.” Limited-payment life insurance refers to a life insurance policy with a limited number of higher payments by eliminating the life-long payments of the past, LIMRA said.
Universal life combination products held 77% of the market share for all combination life policies, even though its sales fell 5% and premium was off 15% from 2013 levels, LIMRA said. Whole life combination products claimed a 17% market share in 2014, LIMRA said, with whole life combination policy sales increasing 48% and premium up 11% from the year before. Variable life combination sales gained 32% from 2013 levels, and its premium also rose by 66% from the prior year.
LIMRA defines life combination products as life insurance products that pay benefits when the insured meets certain criteria for chronic illness or long-term care. Benefits are also potentially payable to the beneficiary upon death if the insured never meets the chronic illness or long-term care criteria, or did not exhaust all the benefits, the organization added. Combination life products are among three distinct insurance products comprising the long-term care insurance market; the other two are individual long-term care insurance and annuity/long-term care combination products. These three classes of products generated an estimated $3.2 billion in total sales in 2104 and covered roughly 230,000 new lives, LIMRA said.
The report noted more than 20 life carriers are writing combination life products and LIMRA “continues to see new entrants.” Fewer than 20 insurers sell individual long-term care products and about five carriers offer annuity/long-term care coverage.