Combination life insurance products, which combine a pool of benefit dollars for covered long-term care expenses, a death benefit for beneficiaries, or both, showed tremendous growth in 2010, with new premium sales soaring 62% to $1.2 billion, according to LIMRA research released June 17.

 “Overall sales of combination products in 2010 were remarkable, especially coming off the double-digit growth experienced in 2009,” said Catherine Ho, LIMRA research actuary, in a press release. “In addition to carriers boosting their marketing campaigns, consumers’ growing desire for an alternative to stand-alone long-term care insurance has driven sales of these products. For some buyers, combination products are a more affordable alternative to stand-alone LTCI.”

New sales of combination products were 6% of the individual life insurance market based on new premium, with more than 26,000 policies sold in 2010. Policy count of combination products jumped 69% over 2009 sales results. 

Meanwhile, sales of whole life and universal life combination products shot up in 2010 over 2009. Universal Life combination products continue to be the biggest sellers in this market, not just in premium but also in new policies and insurance sold. New premium jumped 58% from 2009, representing 80% of the combination market, while policy count jumped 60% from 2009 sales results. 

Sales of variable life products hit lows during the Great Recession, but new premium sales of variable universal life combination products increased 44% and policy count increased 88% in 2010.  

Most of the growth in the past few years in the combination product market has come from linked benefit products, which provide long-term care benefits above the life death benefit. Linked benefit products jumped 60% in 2010, representing 45% of policies sold.

At the same time, acceleration products, which provide long-term care benefits up to the amount of the life death benefit and are more commonly riders that can be attached to many of the products in a carrier’s life product portfolio, soared 76% in 2010, which exceeded sales growth linked benefit products in 2010. Acceleration products now are 55% of the market by policies sold. 

According to LIMRA, individuals in their 60s make up most of the buyers of insurance policies, but acceleration products are gaining popularity with younger buyers who are purchasing higher face amount policies. The average amount for acceleration products has increased continuously, while linked benefit products have stayed the same.

The study shows that female policy owners purchase 65% of in force policies, an increase of six percentage points from the 2009 survey.

Meanwhile, financial institutions and banks sold 32% more combination products based on premium in 2010 compared to 2009, while financial planners and advisors sold 33% more premium in 2010 than in 2009, LIMRA notes.

— Ruthie Ackerman writes for Financial Planning, a SourceMedia publication.

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