Strong sales of indexed universal life kept the broader life insurance market in positive territory last year despite struggling universal life and whole life sales, LIMRA reported Monday.
Overall life insurance premium rose 1 percent in 2017 compared to 2016, according to LIMRA’s U.S. Retail Individual Life Insurance Sales Survey.
New individual life insurance premium in the fourth quarter fell 1 percent compared to the year-ago period.
“Low interest rates have been a plague of fixed universal life sales for years now,” said Ashley Durham, assistant research director for LIMRA Insurance Research.
In the fourth quarter, UL insurance sales fell 20 percent compared to the year-ago period, she said.
Non-indexed UL annualized premium fell by more than $100 million in the fourth quarter, she said.
Of the $100 million drop, about $70 million was attributable to falling premium for lifetime guarantee UL and about $25 million attributable to falling premium for current assumption UL, Durham said.
“We have not seen an increase in UL crediting rates in a while for UL cash values,” Durham said.
Overall Individual policy count fell 3 percent in 2017 compared to 2016, and policy count fell 1 percent in the fourth quarter compared to the year-ago quarter, LIMRA said.
The 1 percent rise in overall new annualized premium is the fourth year of positive sales growth for life insurers overall, LIMRA said.
New annualized premium rose 3 percent in 2016 compared to 2015.
Whole Life Flat for the Year
Whole life premium fell 4 percent in the fourth quarter compared to the year-ago period and ended the year flat compared to 2016, LIMRA reported. It was the first time since 2005 that whole life premium had not seen positive growth for the year.
Policy count rose 1 percent in the fourth quarter compared to the year-ago period, but fell 2 percent for the year compared to 2016.
New premium fell 4 percent in the fourth quarter despite nearly six in 10 insurers reporting growth, LIMRA said.
“We expect whole life to return in 2018 with 2 percent growth and 4 percent growth in 2019,” Durham said.
Whole life represented 35 percent of the total U.S. life insurance market in 2017.
Universal Life Rises 1 Percent in 2017
UL premium fell 4 percent in the fourth quarter compared to the year-ago period but gained 1 percent for the year compared to 2016, LIMRA reported.
IUL, the industry’s star attraction, saw fourth-quarter premium rise 9 percent compared to the year-ago period.
IUL premium rose 8 percent for 2017 compared to 2016, LIMRA reported.
People like IUL policies because they offer market-linked performance and many writers are entering the IUL market. IUL represented 59 percent of universal life premium and 22 percent of all individual life premium, the highest since LIMRA began collecting IUL data in 2006.
New premium for lifetime guarantee UL fell 27 percent in the fourth quarter compared to the year-ago period as some insurers hiked rates and implemented principle-based reserving, or PBR, LIMRA said. PBR, an approach that more closely reflects the risks of complex products, determine policy reserves.
All UL sales combined for the year had a 38 percent market share, LIMRA said.
Variable universal life premium rose 17 percent in the fourth quarter compared to the year-ago quarter, but much of that growth was attributed to one insurer, LIMRA said.
VUL premium rose 2 percent in 2017 and the line has a 6 percent market share of the U.S. individual market, level with 2016.
Term Life Rises 2 Percent in 2017
New premium for term life rose 1 percent in the fourth quarter compared to the year-ago period, with 53 percent of insurers reporting growth.
New annualized premium rose 2 percent in 2017 compared with 2016, LIMRA said. Term life’s market share was 21 percent in 2017.
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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