The Benefits of Combination Life Insurance

Although interest in combination life insurance products has historically been low, recent research indicates they are becoming more popular with consumers. According to LIMRA’s “2016 Insurance Barometer” study, only 16 percent of consumers owned any kind of long-term care insurance, which can be bundled with life insurance in a combination plan. This low incidence of ownership is despite nearly 60 percent of survey respondents admitting that paying for long-term care was a top concern for them.

As it turns out, these products may be starting to catch on with consumers. In a report published by LIMRA April 2016, it was revealed that new premium for individual life combination products increased 14 percent in the previous year. Products that included chronic illness riders grew 38 percent to comprise 59 percent of the total combination product market. Long-term care riders also grew by 51 percent, making up 28 percent of the market.

Life insurance helps families preserve wealth for the future.

Life insurance helps families preserve wealth for the future.

LIMRA also found that millennials showed the most interest in these combination products. The Insurance Barometer study reported that 40 percent of millennial respondents – those age 18 to 35 – said they were very or extremely likely to purchase a life insurance product that included a long-term care plan. Most millennial respondents told LIMRA they believed these policies would be a more financially-savvy way to spend their money.

Americans prioritize LTC

These statistics show that more Americans are warming up to the idea of long-term care and the convenience of packaging it with a traditional life insurance plan. The reasons for this are clear. According to information from the U.S. Department of Health and Human Services, someone turning 65 years old in 2016 has nearly a 70 percent chance of needing some form of long-term health care or support for the rest of their lives. Women, who tend to outlive men, will need almost four years of care total, compared to an average 2.2 years for men.

Clearly, long-term care is an essential cost that families need to budget for and save. The precise amount that will be needed, though, is difficult to determine, but is quite large without insurance to help out. According to Financial Planning, the median cost of an assisted living facility in 2016 was $43,539 per year. A personal, in-home health aid cost $46,332 per year, and a private room in a nursing home ran as high as $92,000 annually. These costs are only expected to grow as the U.S. population grows older.

The rise in sales of combination life insurance products is useful information for financial professionals. If they weren’t already, many clients may be interested in these plans once presented with the facts surrounding them. Financial professionals also can’t discount the needs of younger consumers, particularly millennials, as they may represent one of the biggest growth opportunities in this market.

Long-term care is being more widely recognized as important, and advisors should help their clients recognize how they can ensure a comfortable retirement.

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