Third-quarter sales of indexed universal life (IUL) fell 1 percent to $479.5 million compared to the second quarter.
IUL sales were still up 6 percent compared to the year-ago period, Wink’s Sales & Market Report reported.
Sales figures are being affected by how companies respond to new actuarial risk assessments, analysts say.
New universal life policies issued on Jan. 1, 2020, or later will have to conform to the latest CSO 2017 actuarial tables issued by the Society of Actuaries. That will certainly disrupt sales, one industry expert said.
“Each company will definitely see a decline in sales after implementing the new CSO tables in their repricing, but so far we’ve not seen a lot of companies put their index life chassis on 2017 CSO mortality tables,” said Sheryl J. Moore, president and CEO of Moore Market Intelligence and Wink Inc., publisher of Wink’s Sales and Market Reports.
Repricing IUL policies to conform to new actuarial risk assessments is an opportunity for insurers to tweak product features. But at the same time, it poses challenges for agents and distributors who need time to familiarize themselves with the changes.
Insurers can change the cost of insurance, surrender charges, policy fees, premium loads, monthly expenses, percent of fund charges and sales charges with a repricing, Moore said.
Actuaries periodically update mortality tables based on claims experience, and assessing the risk of death based on factors like age, gender and smoking habits affects IUL pricing.
Third-quarter universal life (UL) sales were $533.6 million, while whole life sales were $1 billion, Wink reported.
Pacific Life a Big Winner in Q3
Low interest rates tend to favor IUL products as purchasers can find higher returns from index-linked or variable life insurance policies than they can with traditional fixed-rate life insurance products.
In the third quarter, Pacific Life was the top IUL seller with a 14.9 percent market share, Wink found.
Hot on the IUL heels of Pacific Life were National Life Group, Transamerica, Minnesota Life-Securian, and Zurich, Wink reported.
Pacific Life’s Pacific Discovery Xelerator IUL was the top selling IUL product for all channels combined, in the third quarter.
IUL sales of $479.5 million were a record for an individual third quarter and the trend augurs well for the fourth quarter, when IUL sales are typically the strongest.
“We’ll see a strong close at the end of the year for cash-value life insurance – index life, universal life and whole life,” Moore said.
Moore was hoping for third-quarter IUL sales near the $500 million mark, but expects to hit or come very close to that number in the fourth quarter.
If that’s the case, “I think we’ll have a record year for IUL sales overall,” she said.
IUL sales last year hit a record $1.8 billion.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]