Whole life, IUL spur individual life premium to 4% growth in early 2016

WINDSOR, Conn. — Individual life insurance new annualized premium increased 4% in first quarter of 2016 compared with the first three months of last year, marking the seventh consecutive quarter of positive growth, according to the LIMRA U.S. Retail Individual Life Insurance Sales Survey released June 2.

“Individual life insurance sales had a good start to the year with growth across all major product lines except variable universal life,” said Ashley Durham, associate research director, LIMRA Insurance Research. “Consistent with 2015, whole life and indexed universal life (IUL) drove the overall growth in first quarter 2016. With the market volatility, it’s not surprising that people are attracted to the protection and guarantees these products offer.”

The total number of policies sold in the first quarter increased 3%, compared with prior year. This is the sixth consecutive quarter of positive growth for policies sold.

Universal life (UL) new annualized premium improved 1% in the first quarter 2016. Declines in lifetime guaranteed universal life and current assumption UL countered the strong IUL sales in the first three months of 2016.

IUL new annualized premium increased 13% in the quarter despite the changes to the illustration regulations late in 2015. IUL was the second biggest driver of overall individual life growth. IUL now represents 56% of UL and 21% of all individual life premium.

Total UL premium represented 37% of all life insurance premium collected in the first quarter 2016.

Variable universal life (VUL) new annualized premium fell 14% in the first quarter 2016. This is a stark change from a year ago when VUL premium jumped 21%. It is likely market volatility at the start of the year that dampened sales.

VUL’s market share dropped to 6% of total life sales in the first quarter.

Whole life (WL) products continue to enjoy positive growth. In the first quarter, WL new annualized premium expanded 11%, and was the biggest contributor of total individual life premium growth. This follows 10 consecutive years of positive growth. WL products benefit from its guarantees and its dividend potential. Sixty-five percent of the companies showed positive growth, including 7 of the top 10 carriers.

WL now represents 36% of the total life market.

Term life insurance new premium grew 3% in the first quarter compared to prior year. This is sixth consecutive quarter of growth. Participating companies indicated that capital requirements, low interest rates and competitive pricing make this market particularly challenging.

Term’s market share was 21% in the quarter.

Total life insurance annualized premium by product category, 1Q 2016

37%: Universal Life

36%: Whole Life

21%: Term Life

About LIMRA: Since 1916, LIMRA, a worldwide research, learning and development organization, has been the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 64 countries. To learn more about LIMRA’s 100th anniversary celebration, please visit www.limra.com/100years.