Term life growth a bright spot in sluggish overall life insurance sales

Term life insurance recorded its sixth consecutive quarter of growth during Q2 in both premium and policy sales, according to LIMRA’s U.S. Life Insurance Sales Survey.

But term sales success could not rescue the overall life insurance market from another sluggish quarter.

Total individual life insurance new annualized premium was $3.98 billion in the second quarter, level with prior year results, LIMRA reported. Policy count fell 1% in the second quarter.

Year to date, new premium totaled $7.7 billion, down 1% and the total number of policies sold dropped 1% with prior year’s results. Northwestern Mutual ranked No. 1 in life sales during LIMRA's first sales rankings released this summer.

Term new premium ticked up 1% in the second quarter to $776 million with eight of the top 10 carriers posting premium gains. Policy count increased 1% in the quarter. Carriers credit term product growth to online platform improvements and expansion, as well as more competitive products or rates.

In the first six months of the year, term premium totaled $1.5 billion, up 2% from prior year. Policy sales increased 2% in the first half of the year. In the first six months of 2024, term new annualized premium market share held 20% of the total U.S. individual life insurance market.

“Term life premium is on pace to reach $3 billion in 2024, a new sales record for the product,” said John Carroll, senior vice president and head of Life & Annuities, LIMRA and LOMA. “The need for life insurance continues to grow, with more than 100 million Americans — and more than half are younger and middle-income adults — acknowledging they live with a life insurance coverage gap. Term offers an affordable, easily accessible option for those who want to get coverage to protect their loved ones. LIMRA is forecasting term sales to continue to tick up slowly in 2024 and 2025.”

LIMRA broke down all life insurance product categories:

Whole life

High interest rates continue to stifle whole life sales as buyers shift money away from high-face or short-pay WL sales or completely away from WL products to other products with the potential for a stronger return. WL new premium totaled $1.48 billion in the second quarter, down 7% from prior year’s results. The number of policy sales fell 5% in the quarter.

For the year, WL new premium fell 8% to $2.9 billion. Policy count dropped 6% in the first half of the year. Whole life insurance new premium held 38% of the total new annualized premium sold in the first half of the year.

“Whole life sales, which represent the largest proportion of the U.S. life insurance market, have struggled under a higher interest rate environment in the first half of 2024,” said Karen Terry, assistant vice president, head of LIMRA’s Insurance Product Research. “The Federal Reserve is anticipated to lower interest rates in the fall, which may relieve some of the stress on whole life sales growth in the second half of the year.”

Fixed universal life

For the fourth consecutive quarter, fixed universal life new premium increased. In the second quarter, fixed UL new premium was $277 million, up 5% year over year. The rise in fixed UL premium was mainly driven by hybrid life/long-term care product sales. The number of fixed UL policies sold fell 7% in the second quarter.

Year to date, fixed UL premium was $532 million, 8% higher than prior year but policy count dropped 5%. Fixed UL premium represented 7% of the total new annualized premium in the first half of 2024.

Variable universal life

Variable universal life new premium jumped 10% the second quarter to $530 million. Six in 10 VUL writers reported gains with most experiencing double-digit premium growth. In the second quarter, policy count improved 5% year over year.

In the first half of 2024, VUL premium was $928 million, increasing 3% compared with the same period of 2023. The number of policies sold was 5% higher than the first six months of 2023. VUL premium held 12% of the total U.S. life insurance market YTD.

Indexed universal life

In the second quarter 2024, indexed universal life new premium was $917 million, a 1% increase from prior year. Policy sales jumped 12% in the second quarter due to the continued growth in mid-to-lower case market.

IUL premium grew 2% to $1.79 billion for the year. The number of policies sold spiked 12%, with about half of carriers posting positive growth. IUL premium represented 23% of the total new annualized premium in the first half of the year.

For more details on the sales results, go to LIMRA’s Fact Tank.

This report compiled by InsuranceNewsNet staff.