I found a somewhat simpler workaround for this (17.04 and 17.10):

On the "Installation type" screen, I select guided partitioning with
luks & lvm. This way the two fields for the passwords appear. Then, I
enter my desired password, switch back to manual partitioning, and click
next.

This way, when I create the physical volume for encryption, the
encrypted volume shows up as expected.

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https://bugs.launchpad.net/bugs/1510731

Title:
  Bug in ubiquity-frontend-kde: Can't create LUKS encrypted volumes
  during manual disk setup in Kubuntu 17.10 (does not affect Ubuntu,
  Ubuntu MATE, or Ubuntu Budgie)

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