LIMRA forecasts U.S. individual life insurance sales to grow slowly but relatively steady over the next several years, with overall new annualized premium predicted to grow 2% in both 2018 and 2019.
Because of the anticipated slowdown in the growth rates of disposable income and bond rates, LIMRA forecasts growth to dampen to 1% annually in 2020 and 2021.
Total premium for life insurance was $14.1 billion in 2016. LIMRA predicts premium will increase to $14.4 billion by end of 2017 and increase to $14.7 billion in 2018. In 2019, 2020 and 2021, LIMRA expects total premium to be $15.0 billion, $15.2 billion and $15.4 billion respectively.
Here’s a look at how LIMRA predicts sales in major product categories will evolve through 2021:
Universal life premium is expected to show a 3% increase in 2017, a result of growth in indexed UL premium coupled with a decline in UL products with lifetime guarantees. LIMRA predicts 2018 to experience 4% growth in UL premium. In 2019, premium growth slows to 2% and drops to 1% growth in 2020 and 2021 partly due to the forecasted slowdown in disposable income growth rates (according to Oxford Economics).
Following three years of considerable growth, whole life premium growth will be flat in 2017, a result of a very soft third quarter (premium declined for the first time in 14 quarters). Looking to the future, LIMRA expects whole life premium to rise 2% in 2018 and 4% in 2019. In 2020 and 2021, LIMRA is predicting whole life to grow 3% each year.
Term life premium will slow after a more moderate increase in 2017. LIMRA anticipates term premium in 2018 and 2019 to remain relatively level with 2017 results. There will be a slight increase in premium in 2020 and 2021, increasing 1% each year. Offsetting impacts from various economic factors are keeping term forecasts relatively flat.
Variable universal life (VUL) holds the smallest market share (6% of the total market), which can lead to a lot of volatility in sales growth. This makes year-to-year forecasting more difficult. Double-digit changes have occurred in three of the last five years. That being said, LIMRA is predicting 3% growth for 2018, -3% growth for 2019, -6% growth for 2020 and -3% growth for 2021. The negative growth starting in 2019 is partially driven by projected slowdowns in the equity market.
There are outside factors not considered in LIMRA’s current forecasts that could influence sales growth over the next four years, including the impact of product development and re-pricing from the change to 2017 Commissioner’s Standard Ordinary (CSO) mortality tables, expansion of automated underwriting, and new product regulation.