LIMRA: Annuity sales on track to set new record in 2024

With sales of annuities exploding to record levels, it’s probably no surprise that in the first nine months of 2024 total annuity sales increased 23% to $331.2 billion, and are on pace for another record-breaking year, according to LIMRA’s U.S. Individual Annuity Sales Survey.

Total U.S. annuity sales reached a record-high $385.4 billion in 2023, ballooning 23% year over year, according to LIMRA’s U.S. Individual Annuity Sales Survey. Insurers last year paid out $104 billion in annuity benefits, the most ever, and a nearly 10% increase over 2022 benefits.

“Annuities have been available for more than a century, though in many ways you could say they are finally being understood as a retirement product for most everyone,” said David Chavern, president, and CEO of the American Council for Life Insurers. “For example, research shows that people retiring with $250,000 or less would most benefit from annuitizing higher portions of their retirement savings, if not all of it.”

Interestingly, ACLI data show life insurance purchases and in-force coverage increased in 2023 to record levels, while life insurance death benefit payments decreased nearly 3 percent to $89 billion.

Traditional pensions 'declining'

“Traditional pensions that guarantee retirees income for life are declining. Couple that with the Peak 65 era we are in today with 11,200 on average daily reaching age 65 and it is clear why Americans are dedicating more of their savings to annuities. They want guaranteed sources of retirement income,” Chavern said.

LIMRA announced Thursday that total retail life insurance new annualized premiums jumped 6% to $3.9 billion in the third quarter 2024. The number of policies sold in the third quarter was level with the same period in 2023.  Year to date (YTD), new premiums topped $11.6 billion, up 1% over the prior year’s results.

“Following solid third-quarter results and strong preliminary October sales figures, LIMRA expects 2024 will mark the fourth year of record-high new premium collected for the industry,” said John Carroll, senior vice president and head of Life & Annuities, LIMRA and LOMA. “Barring an unforeseen economic downturn, LIMRA is forecasting life sales to grow in 2025.”

VUL new premium rises

Variable universal life (VUL) new premium totaled $668 million in the third quarter, 41% higher than third quarter 2023. Accumulation-focused products drove much of the sales this quarter, prompted by the continued growth in the equity markets. The number of policies sold rose 3% in the quarter. Year-to-date, VUL new premium jumped 17% to $1.6 billion and policy count increased 4%. In the third quarter, VUL held 17% of the total U.S. individual life insurance market.

Whole Life new premium totaled $1.3 billion in the third quarter, down 3% from the prior year’s results. The number of whole life policies sold slipped 1%. YTD, whole life new premium dropped 6% to $4.3 billion. Policy count fell 4% compared with the same period in 2023.

“Whole life sales continue to struggle under higher interest rates as consumers move to products with potentially better returns,” said Karen Terry, assistant vice president, head of LIMRA’s insurance product research. “Should the yield curve return to normal next year, we expect WL sales to improve in 2025.”

In the third quarter, whole life new premium represented 34% of the total life insurance market.
Term life sales also tumbled slightly in the third quarter, LIMRA said. In the third quarter, term life new premium totaled $727 million, down 1% year over year. Policy count also fell 1%, compared with third quarter 2023. The number of policies sold increased 1% in the first nine months of 2024. Term life new premium represented 19% of total sales in the third quarter.

More details on sales results can be found at the Life Insurance Sales Growth Rates (2024 Third Quarter) in LIMRA’s Fact Tank.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].