Windsor, CT, March 11, 2003 — Individual life insurance sales increased across the board in 2002, with gains in annualized premium (3 percent), face amount (12 percent), and number of policies (1 percent), according to LIMRA International’s quarterly survey.
“While not dramatic, this is the first indication of a turnaround in individual life insurance policies sold in 19 years,” said Elaine Tumicki, vice president and head of product research for LIMRA. The results are based on the participants in LIMRA’s quarterly life insurance sales survey. Industry-wide results that will be available in mid-year are expected to confirm the positive sales trend for 2002. Annual sales of policies have been in decline since 1984.
Fixed products continue to drive sales growth with universal life (UL) leading the way. After slowing down in the third quarter, UL annualized premium jumped back up in the fourth quarter with a growth rate of 46 percent compared with the same quarter of 2001. This is on top of a strong fourth quarter last year — annualized premium for fourth quarter 2001 was up 25 percent over fourth quarter 2000. UL represents 28 percent of premium for 2002, the highest share for UL since 1986.
Although term sales slowed a little in the fourth quarter, with a single digit increase, annualized premium for the year is still up 13 percent, exceeding industry expectations. Whole life ended the year with a 13 percent increase over 2001, the first time since 1990 that whole life has recorded double-digit growth for the year.
Offsetting the growth in fixed products, variable life (VL) and variable universal life (VUL) declined compared to the same quarter prior year for the seventh consecutive quarter. Annualized premiums in 2002 for variable life products were 24 percent lower than in 2001. Nine of the top 10 VUL companies reported declines in sales for 2002. “The variable product share of life sales has tracked closely with trends in the stock market over the last several years,” Tumicki said. “Given recent market performance, it is unlikely variable life sales will rebound in the near term.”
Survivorship life annualized premium was down 5 percent for the quarter (compared to fourth quarter 2001) and 12 percent for the year. The fourth quarter declines were driven by variable products — both UL and whole life increased compared to fourth quarter 2001. Survivorship UL is now even with survivorship VUL in terms of market share, with both at 43 percent of annualized premium. This is a dramatic shift from a year ago, when variable products had twice the share of UL (57 percent vs. 29 percent).