The drop, which came despite a rise in policy sales, ended a three-year streak of growth in premium
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Following three consecutive years of growth, total new premium for individual life combination products declined by 2% to US$4.3 billion in 2018, according to the 2018 Individual Life Combination Products Annual Review conducted by LIMRA.
As reported by InsuranceNewsNet, the decrease in premiums came even though 404,000 policies were sold last year, representing a 2% increase over 2017. Combination products represented 27% of the overall US individual life insurance market last year.
“The decline in total premium is a result of more companies shifting to introduce recurring premium options,” said Daniel McAllen, associate analyst with LIMRA Insurance Research. “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.”
According to McAllen, the shift indicates a growing movement to attract mass-affluent buyers, who may be unable to invest a large lump sum but still want the dual protection offered by combination products.
Drilling down to the product level, the largest premium growth was observed among whole life (WL) combination products, advancing by 34% over 2017. WL held 27% of the combination market, up seven percentage points compared to 2017. There was also a 5% increase in variable universal life premiums in 2018, though the products’ market share remained steady at 5%.
Premium for universal life (UL) combination and term combination policies both declined 11% year-on-year. UL combination premium retained dominance of the market with a 66% share, though that was seven percentage points less than 2017. Term combination premium held just a 2% sliver of the combination product market last year.
LIMRA also found that long-term care (LTC) acceleration riders and chronic illness (CI) acceleration riders each held 41% of the premium market in 2018. The rest of the market went to LTC extension products, which also held the largest proportion of policies with 64%.
