Indexed Life Sales Dip 1.3% in 4Q, Flat in 2016

Indexed universal life (IUL) sales dipped 1.3 percent to $534.5 million in the fourth quarter 2016 compared to the year-ago period. The drop was due primarily to declines from two sellers, according to industry tracker “Wink’s Sales & Market Report.”

IUL sales, measured by premium revenue, for 2016, rose to a record $1.86 billion. That was just a hair above the $1.85 billion in 2015, Wink's said.

“It is hard to believe that indexed life continues to prosper with AG 49 just in the rearview mirror,” said Sheryl J. Moore, president and CEO of Moore Market Intelligence and Wink Inc.

“This was not only a record-setting year for indexed life sales, but 4Q 2016 was the second greatest quarter ever in terms of sales.”

Fourth quarter IUL sales rose 18 percent compared with the third quarter, according to the 78th edition of Wink’s Sales & Market Report, which aggregates data from 48 insurance companies.

The average indexed universal life target premium reported for the fourth quarter was over $8,671. This was an increase of more than 5 percent from the third quarter, Wink’s reported.

The average fixed universal life target premium was $8,840, an increase of more than 50 percent compared to the third quarter.

Leaving AG 49 Behind

AG 49, or Actuarial Guideline 49, took effect Sept. 1, 2015.

The rule added more consistency to the way insurance companies illustrated IUL product performance over time. Carriers had to take another look at illustration scenarios to make sure they were accurately disclosing values to agents and consumers.

Product introductions were affected by the rule, but activity in the IUL space is likely to pick up in 2017, said Andrea Mack, second vice president, Individual Product Solutions Group, with Securian Financial Group.

Earlier this month, Securian announced the launch of Orion IUL, a significant revamp of an IUL product in the market since 2006.

Some industry experts had speculated that the IUL market would gain as Department of Labor fiduciary rules dampened sales of fixed indexed annuities (FIAs). But both the IUL and the FIA market ended 2016 with record sales.

Non-qualified premiums fund the IUL market while the DOL regulators are concerned with qualified premiums funding indexed annuities so the two categories are funded through different mechanisms, Moore said.

“I anticipate (IUL) sales will be up in 2017,” Moore said.

Investors like index-linked products because the potential interest to be earned is higher than what they receive from the safety of a comparable bank product weighed down by low interest rates.

FIA sales, which have been a marketplace favorite over the past few years, rose 12 percent to a record $60.9 billion in 2016, LIMRA Secure Retirement Institute reported earlier this year.

Fourth quarter IUL sales saw declines from Accordia and Transamerica as Pacific Life took over the No. 1 spot, Wink’s also reported. Pacific Life now has a 12.1 percent market share.

Other top IUL sellers in the fourth quarter were Transamerica, National Life Group, Minnesota Life and Lincoln National Life, Wink’s said.

Channel Breakdown

Sales leaders in the fourth quarter by channel were, according to Wink’s:

Bank channel: Pacific Life

Career channel: AXA US

Direct Response: AIG

Independent agent: Pacific Life

Independent broker-dealer: Protective Life

National broker-dealer/wirehouse: Nationwide

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].