After a promising start in 2008, individual long-term care insurance (LTCI) premium fell 23% in the fourth quarter, ending 2008 down 7%, according to the Individual Long-Term Care Sales survey released by LIMRA, a worldwide research, consulting and professional development organization.

“The economic downturn had a significant impact on LTCI sales during the second half of 2008,” says Karen Fisherkeller, LIMRA associate analyst, group and LTC product research. “Historically, individual products have emerged relatively unscathed from the effects of a recession. This time, however, all individual product lines have taken a hit and LTCI appears particularly vulnerable.

“Unlike other, more widely understood and sought after products, LTCI carriers have struggled in their efforts to convince consumers of the need to protect for the LTC risk, and in today’s economy, that which is not deemed necessary is put on hold,” Fisherkeller says. “Growth from the beginning of 2007 through mid-year 2008 gave the industry reason to believe that it had turned a corner following four years of declining sales. While current sales are discouraging, the industry remains hopeful that as economic times improve, so will the market.”

The year 2007 marked a year of growth for individual long-term care insurance, with nearly $650 million in new annualized premium sales. But growth was reversed in the second half of 2008, with the market recording sales of just over $600 million for the year.

The number of new individual LTCI buyers neared 277,000, down 9% for year-end 2008. LIMRA estimates that this drop returned sales to where they were in the early 1990s.

There were approximately 4.8 million individual LTCI policies in force at the end of 2008, a 2% increase over year-end 2007. Despite the economic pressures facing Americans, individual LTCI lapse rates continue to be low, with only about 4% of policies (lives) unaccounted for at year-end.

Total premium in force at the end of 2008 was approximately $8.6 billion, an increase of 5%.

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