LIMRA: Second-Quarter US Sales of Individual Life Insurance Rose 1%
September 9, 2014 by Fran Matso Lysiak
WINDSOR, Conn. – The second quarter of 2014 continued to be slow for sales of individual life insurance in the United States as total sales, based on new annualized premium, rose 1%, according to LIMRA. Driving overall sales was individual whole life, which rose 6% during the period.
“Over the past six years, whole life has demonstrated strong, consistent growth, which has buoyed overall insurance sales,” Benjamin Baldwin, associate analyst of LIMRA insurance research, said in a statement, noting whole life holds 34% of the market.
Overall, policy count improved 4% in the quarter, which is the first positive quarterly growth in policy count for six quarters, LIMRA said. Year-to-date, however, policy count was 3% lower than the prior year.
Term life insurance premium was flat in the second quarter, resulting in a 3% decline year-to-date, LIMRA said. Market share for this line remained steady at 23% in the quarter.
Universal life new annualized premium fell 8% in the quarter as a 33% decline in guaranteed UL contributed “substantially” to the overall performance of universal life, LIMRA said.
“Responding to new reserving requirements implemented in 2013, we saw companies re-pricing or adjusting features on their guaranteed universal life products,” Baldwin said in a statement on LIMRA’s first-quarter 2014 results.
Market share for universal life stood at 36% of total life sales at the end of the second quarter.
Indexed UL premium improved 14% in the second quarter, resulting in a 13% increase for the first half of this year, LIMRA said. This line represented 17% of overall individual life premium in the quarter and 42% of total UL premium.
Indexed UL is a permanent life policy that allows policyholders to tie accumulation values to a stock market index. These policies typically contain a minimum guaranteed fixed interest rate component along with the indexed account option.
For stock market-linked variable UL, which represents 7% of total life insurance sales, sales rose 30% in the second quarter, growing 23% year-to-date, representing the seventh-straight quarter of growth for variable UL, LIMRA said.
For all of 2013, total sales of individual life insurance were flat, after three straight years of growth.
A LIMRA study on middle-market consumers found that 46% own individual life insurance, revealing a gap in protection. For the study, the middle market was defined as people ages 25-64 with annual household incomes of $35,000 to $99,999.
While 60% own group life, the coverage often is less than individual policies and is only in place while the person is employed, LIMRA said. Middle-market consumers also said they were not financially prepared for the death of a family member, with the majority, 51%, indicating they would need to make a drastic or significant financial change if that occurred.