LIMRA: Life Sales Up in ’11

Individual life insurance sales increased 4% in new annualized premium in 2011, marking the second consecutive year of growth, according to LIMRA International.

Here’s what was drove the increases last year.

Whole life premium increased 9%.   This is the sixth consecutive year of growth in whole life sales, which prior to the economic instability of the 200os, had been languishing for years.  Generally speaking, consumers and financial advisers are seeking security and stability. In spite of their higher costs, contractually guaranteed cash values and death benefits make  whole life contracts attractive to that market.

Indexed universal life. Premiums increased an impressive 38% in tandem with a 30% rise in policy count. Consumers, especially those in the 60 to 70 age bracket, like the indexed UL proposition of greater potential upside accompanied by guaranteed protection from loss of principal.  As a result, LIMRA expects indexed UL sales to remain strong in 2012.

Term universal life is carving out a niche in the life insurance market, finding appeal among older, 60-something consumers.  It is also establishing a foothold in business planning and wealth transfer applications. Affordability is a key selling point.  UL premiums are priced near or at those of traditional level-premium term.   A simplified conversion capability is also attracting the attention of those that want to make sure they have solid options beyond the low, level-premium period.

Variable universal life (VUL) experienced a resurgence of its own in 2011. A huge 36% jump in the fourth quarter of last year led to an overall 22% increase in VUL premium in 2011. However, the number of VUL policies sold dropped 9% last year.  VUL policy count hasn’t increased in the past 7 years.   As a result, VUL is losing market share to products like indexed UL.