Individual Life Combo Sales See Double-Digit Growth, LIMRA Says

WINDSOR, Conn., April 25, 2016 —Individual life combination product new premium increased 14 percent in 2015, a rebound from the decline in new premium growth in 2014, according to LIMRA's 2014 Individual Life Combination Products Annual Review.

New premium totaled $3.1 billion in 2015, which represents 15 percent of all new premium collected for individual life insurance products.   There were more than 200,000 policies sold in 2015, a 37 percent increase compared with 2014 totals.

“Last year’s decline in new premium was mainly due to a shift from single premium products to limited pay products. While this shift continued in 2015, single premium products also exhibited strong growth in 2015, said Karen Terry, LIMRA assistant managing director, Insurance Research.  “The growth was widespread, with a dozen companies reporting healthy growth in both premium and policy count.”

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 noted that some companies are shifting from single premium (where the customer pays the entire amount for the insurance in one lump sum) to a limited pay payment structure (where the customer pays at least two payments but not for the rest of their life) for their combination life products.  Generally, LIMRA has found the majority of limited pay combination products have less than 10 annual premium payments.

The study found products with chronic illness acceleration riders grew 38 percent and represent 59 percent of the combination life insurance market. Products with long term care acceleration riders experienced stronger growth in 2015, up 51 percent from prior year, but only represent 28 percent of the market.

“We see more companies offering CI acceleration riders with their products with no up-front costs and often automatically attach these riders to specific products,” noted Terry.

Sales of all product types increased in 2015.  Whole life combination products experienced the largest growth, increasing 30 percent in premium and 61 percent in policy count (chart). Despite this strong performance, universal life combination products continue to hold three quarters market share by every measure (premium, policy count and face amount).

LIMRA research has been tracking a transition in the long term care insurance market, expanding to three distinct insurance products: individual long term care insurance (ILTCi), the life combination product, and the annuity/LTC product.  Collective sales for the three products in 2015 are estimated almost $4.0 billion with more than 300,000 new lives covered.   Due to the cost structure and the added life insurance protection of the product, life combination products account for the majority of the estimated 2015 new dollars.

Of the three distinct insurance products, life combination products are offered by more insurers and continue to see new entrants. More than 20 life carriers are in this market. Currently less than 20 insurers sell in the individual long term care insurance (ILTCi) market, and an estimated 5 insurers sell an annuity/LTC product.