p class=”normal”>Windsor, March 4, 2002 — A volatile stock market,
uncertainty over estate taxes and a cataclysmic assault on the national centers of power
all played a role in sales of individual life insurance during 2001. The year ended with
total premiums down slightly from the prior year, but with some fresh interest in
previously declining products, according to LIMRA International.
“The first year of the 21st Century has come to a
close and what a year it has been for individual life insurance sales,” said Elaine
Tumicki, AVP, Product and Distribution Research, LIMRA International, who produces LIMRA’s
quarterly industry survey of individual life insurance sales. “Recent hot sellers
have cooled off and products that were in a state of decline are showing new signs of
life. There has been some evidence of a surge in individual life activity after the events
of September 11 and there’s substantial interest in whether the increases in applications
are translating into increases in paid-for policies.”
Fourth quarter results were mixed. Annualized premium was
down 1 percent compared to the same quarter of 2000 while face amount and policy count
increased 8 and 5 percent, respectively. Policy growth, however, was affected by one
company that had unusually high sales in the fourth quarter of 2001. Excluding that
company from both years, policy count would have been up by only 2 percent.
“Although any increase in the number of policies sold
is a positive sign for the industry, it’s important to keep it in perspective,” Tumicki said.
The fourth quarter of 2000 was a particularly weak quarter
in terms of policies sold, registering a decline of 12 percent compared with the fourth
quarter of 1999. Even though the fourth quarter of 2001 is up compared with a year ago,
it’s down 8 percent compared with 1999 and 9 percent compared with 1998.
“While policy sales are headed in the right direction,
there’s still a way to go to achieve the levels of just a few years ago,” Tumicki
noted. “Perhaps the increase in applications means there are more policies in the
underwriting pipeline which will lead to a strong first quarter 2002.”
The latest survey, for fourth quarter and year-end 2001,
tracks new individual life insurance sales for 84 companies and their 73 subsidiaries.
Overall, sales are down across the board for the year,
Tumicki said. Annualized premium is down 3 percent, face amount is down 7 percent and the
number of policies sold is down 5 percent.
“But there were some bright spots,” she added.
“With a premium increase of 18 percent compared to last year, universal life (UL) had
its best year in terms of growth rates since the mid-1980s, although it’s still far below
its mid-1980s market share. Whole life stemmed a decade-long series of declines with an
increase of 5 percent in premium. Perhaps consumers or, more likely, producers are more
comfortable with the guarantees of whole life and UL during the current volatility of the
Term insurance has rebounded from the post-XXX rise and
fall in sales, the survey reports. Although the year ended at minus 9 percent for premium,
the fourth quarter recorded an increase compared to same quarter prior year for the first
time since the second quarter of 2000.
Variable universal life (VUL) and variable life (VL) posted
a yearly decline in new premiums for the first time since 1995 and only the second time in
the last decade. The year-plus of declines in the stock market has taken a toll on
variable life products, Tumicki said. Although there may be good buys in a down market, it
appears many negative-return weary consumers and producers are staying away for now.
Survivorship life has not yet recovered from the
“alleged” repeal of the estate tax. Premium, face amount and policy count were
all down more than 25 percent compared with 2000. Survivorship VUL was particularly hard
hit at the close of the year, with a decline of 39 percent in premium compared with fourth quarter 2000.
“But there may be light at the end of the tunnel for
survivorship,” Tumicki said. “Those who have followed the estate tax issue
closely know that the estate tax repeal is in reality a temporary repeal – estate taxes
disappear for the year 2010 and that year only. A recent effort to permanently repeal the
estate tax as part of an economic stimulus package broke down before it got anywhere.
“As consumers and advisors recognize the prospects for
a permanent repeal of the estate tax are very dim, survivorship life sales should begin to
recover,” she said.
Howard S. Drescher, 860-285-7875, [email protected].
LIMRA International is a worldwide association of insurance
and financial services companies, established to help its members improve their marketing
and distribution effectiveness. Founded in 1916, LIMRA International provides research,
consulting, products, and learning to more than 800 organizations in 60 countries. LIMRA’s
Web site is www.limra.com.