Universal Life Continues to Lead the Way in Life Sales

Windsor, CT, February 26, 2004 � For the third year in a row, sales of universal life outpaced those of other life insurance products, accounting for 35 percent of the new annualized premium generated in 2003.

Fueled by a 5 percent increase in the fourth quarter, overall U.S. individual life sales in 2003 were even with 2002. While overall premium was flat for the year, total face amount was off slightly by 2 percent and policies sold were down by 4 percent.

Despite the strong stock market rally last year, sales of variable life products failed to turn around, although the fourth quarter decline was not as steep as the declines in earlier quarters. Over the past several years, sales of variable products have been closely aligned with fluctuations in the S&P 500 stock index.

“The variable life product marketplace will bear watching over the next few quarters to see if sales start to rebound if the stock market continues to increase,” said Elaine Tumicki, corporate vice president and head of product research at LIMRA International. “In the recent UL sales surge, many of the companies that did well early on were the ones that had maintained their UL products even during the variable life sales boom of the late Nineties.”

An analysis of companies that have been successful over the long term indicates that maintaining a robust product portfolio to respond to different environments is one of the keys to success, Tumicki said.

For the year, premiums for variable universal life and fixed variable combined were down 33 percent. At the other end, universal life premium increased 28 percent over 2002. Premiums for term insurance were up 1 percent and whole life premiums increased 7 percent. Companies in the survey account for a little more than 75 percent of the industry.

Tumicki noted that UL products with long-term secondary guarantees are helping to stimulate sales. Companies participating in a recent LIMRA survey of UL products reported higher growth for their newer guaranteed products than for traditional current assumption UL products.

LIMRA International is a worldwide association providing research, consulting, and other services to nearly 850 insurance and financial services companies in more than 60 countries. LIMRA was established in 1916 to help its member companies maximize their marketing effectiveness.

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