US Sales Of Life Insurance Policies Hit Four-Decade High – Financial Advisor Magazine
In the face of a deadly pandemic, Americans are preparing for the worst by buying life insurance policies in the highest numbers since 1983, according to a new study by LIMRA.
LIMRA’s “Second Quarter U.S. Individual Life Insurance Sales Survey,” which represents nearly 80% of the U.S. individual life insurance annualized premium market, reports that during this year’s first half the total number of policies sold increased 8% versus prior year results.
Total U.S. life insurance premiums increased 21% in the second quarter, the largest year-over-year increase since the third quarter in 1987, LIMRA said. For the first half of 2021, total premiums increased 18% compared to the same time period last year.
Whole life represented 36% of the U.S. life insurance market in the second quarter, and the category’s product sales experienced the largest growth in terms of absolute dollars and policies sold, LIMRA said.
Three-quarters of whole life carriers reported positive growth, including nine of the top 10 carriers. Whole life premiums were 22% higher in this year’s first half versus the year-earlier period.
Indexed universal life new premiums grew 20% in the second quarter, up 17%, while fixed universal life new premiums rose 7% for the second quarter, but fell 2% during the first six months of 2021.
Indexed universal life offers the insured a cash value component in addition to a death benefit, which can earn interest based on a stock market index chosen by the insurer.
Fixed universal life is paid for by periodic premium payments associated with a no-lapse guarantee in the policy.
During the second quarter, the indexed universal life represented 24% of total premium, while the fixed universal life market share was 8%.
Variable universal life new premiums grew 69%, compared with prior year results, representing the 15th consecutive quarter of premium increases.
Variable universal life builds cash value that the contract owner can choose to invest in a wide variety of separate accounts, similar to mutual funds.
David Levenson, president and CEO of LIMRA, LOMA and LL Global, indicated that increased popularity of the financial product during a pandemic was no surprise.
“COVID-19 has raised consumers’ awareness about the importance of having life insurance coverage,” he said in a news release announcing the study’s findings. “Nearly a third of consumers (31%) said they were more likely to purchase coverage due the pandemic. This is so important because too many Americans live with a life insurance coverage gap, leaving their loved ones’ financial security at risk.”
