Total U.S. individual life insurance new annualized premium fell 5% in the third quarter compared with prior year results, according to LIMRA’s U.S. Retail Individual Life Insurance Sales Summary for Third Quarter 2022.
Despite the quarterly decline, new premium in the first nine months of 2022 remained 6% above results during the same period in 2021.
“The strong consumer demand for life insurance we saw in 2021 has been waning,” said John Carroll, senior vice president and head of Insurance and Annuities — U.S. and Canada, LIMRA and LOMA. “Since January 2022, consumers’ concerns about the pandemic, which played a role in driving the record premium and policy sales growth in 2021, have diminished as worries about the economy and inflation increased over several months. As a result, the surge in smaller whole life (WL) and term policy sales experienced in 2021 ended in 2022. Although new premium for these products remains above pre-pandemic levels.”
Overall policy sales fell 12% in the third quarter and 10% year-to-date (YTD).
Indexed universal life (IUL) was the only product line to record positive growth in the third quarter. IUL new annualized premium increased 2% in the third quarter. In the first nine months of 2022, IUL new premium rose 22%. The growth was concentrated with less than half of carriers reporting gains. LIMRA is forecasting double-digit growth for IUL products in 2022, but expects a minor decline in 2023. IUL premium held 28% of market share of the total U.S. life insurance premium in the first three quarters of 2022.
Equity market declines have slowed the remarkable growth VUL experienced over the past 19 quarters. Variable universal life (VUL) new premium dropped 12% in the third quarter 2022, following the 104% growth in the third quarter 2021. YTD, VUL premium was up 18%. Continued market volatility will impact VUL sales through the rest of the year. LIMRA predicts VUL premium growth to be in the mid-single digits for 2022, and level for 2023. VUL held 13% of premium market share in the first nine months of 2022.
Fixed universal life (UL) new annualized premium dropped 25% in the third quarter and fell 12% in the first nine months of the year. Fixed UL market share remained 7% of the total U.S. life insurance market in the first three quarters of 2022.
Whole life (WL) new annualized premium fell 2% in the third quarter. YTD, WL new premium was 1% higher than prior year. Historically, inflation has not benefited whole life insurance sales. As a result, LIMRA is forecasting slight declines in 2022 with sales leveling in 2023. Whole life premium represented 33% of the total U.S. life insurance market YTD.
Term product sales fell for the fourth consecutive quarter. In the third quarter, term new premium dropped 6% from prior year, and fell 5% YTD. Half of the carriers reported drops in term premium for the quarter, compared with prior year. LIMRA expects term product sales to decline in 2022, and growth to improve in 2023. Term’s market share represented 19% of the total U.S. market in the first nine months of 2022.
“Term and whole life are the mainstay products for a majority of Americans seeking life insurance protection, representing 86% of policies sold in the first nine months of 2022,” noted Elaine Tumicki, LIMRA corporate vice president and director of insurance product research. “Our research shows consumers are worried about inflation and a potential recession. One in 10 consumers said they have reduced, canceled, or put off buying needed insurance or plan to if economic conditions persist. This is worrisome because the need for life insurance has never been greater. More than 100 million American adults live with a coverage gap.”
LIMRA’s Third Quarter 2022 U.S. Individual Life Insurance Sales Survey represents approximately 85% of the U.S. individual life insurance annualized premium market.