High interest rates put chokehold on whole life in flat Q2 , LIMRA finds

Individual life insurance new annualized premium totaled $3.97 billion in the second quarter, level with prior-year results, according to LIMRA’s preliminary U.S. Life Insurance Sales Survey.

Policy count was flat for the quarter.

Year to date, new premium totaled $7.7 billion, down 1%, and the total number of policies sold was level with the prior year’s results.

“Whole life sales, which represent the largest proportion of the U.S. life insurance market, have struggled under a higher interest rate environment in the first half of 2024,” said Karen Terry, assistant vice president, head of LIMRA’s Insurance Product Research. “If the Federal Reserve reduces interest rates in the fall, LIMRA expects whole life sales to rebound in the second half of the year.”

Life insurance premium set a record in 2023 that will be hard for the industry to match. LIMRA provided a breakdown of new premium results for each product category:

Whole life

High interest rates continue to dampen whole life sales as buyers shift money away from high-face or short-pay WL sales or completely away from WL products to other products with the potential for a stronger return.

WL new premium totaled $1.46 billion in the second quarter, down 7% from the prior year’s results. The number of policy sales fell 6% in the quarter.

For the year, WL new premium fell 7% to $2.92 billion. Policy count dropped 5% in the first half of the year. Whole life insurance new premium held 38% of the total new annualized premium sold in the first half of the year.

Term life

Term new premium rose 2% in the second quarter to $786 million with 8 of the top 10 carriers posting premium gains. Policy count grew 2% in the quarter. This is the sixth consecutive quarter of growth in both premium and policy sales. Carriers credit term product growth to online platform improvements and expansion, as well as more competitive products or rates.

In the first six months of the year, term premium totaled $1.5 billion, 3% higher than the prior year. Policy sales increased 3% in the quarter. In the first six months of 2024, term new annualized premium market share held 20% of the total U.S. individual life insurance market.

Fixed universal life

For the fourth consecutive quarter, fixed universal life new premium increased. In the second quarter, fixed UL new premium was $279 million, up 5% year over year. The rise in fixed UL premium was mainly driven by hybrid life/long term care product sales. The number of fixed UL policies sold fell 7% in the second quarter.

Fixed UL premium is $526 million for the year, 5% higher than the prior year but the policy count dropped 6%. Fixed UL premium represented 7% of the total new annualized premium in the first half of 2024.

Variable universal life

Variable universal life new premium jumped 10% in the second quarter to $536 million. Nearly three-quarters of VUL writers reported gains with most experiencing double-digit premium growth. In the second quarter, the policy count improved 5% year over year.

In the first half of 2024, VUL premium was $934 million, 2% higher than the same period of 2023. The number of policies sold rose 4%, compared with the first six months of 2023. VUL premium held 12% of the total U.S. life insurance market YTD.

Indexed universal life

In the second quarter 2024, indexed universal life new premium was $913 million, level with the prior year. Policy sales, however, climbed 11% in the quarter due to the continued growth in the mid-to-lower case market.

For the year, IUL premium grew 2% to $1.78 billion. The number of policies sold jumped 12%, with half of carriers posting positive growth. IUL premium represented 23% of the total new annualized premium in the first half of the year.

For more details on the sales results, go to Second Quarter 2024 U.S. Life Insurance Industry Estimates in LIMRA’s Fact Tank. LIMRA’s Retail Individual Life Insurance Sales Survey represents 85% of the U.S. life insurance market.

This report compiled by InsuranceNewsNet staff.