Life insurance coverage gross sales surge in Q3
In the year to date, total new premiums have increased by 18%, the largest nine-month growth in 25 years. All product lines recorded positive premium increases in the third quarter as well as in the year to date, according to LIMRA.
While total policy sales were at the previous year’s level, the number of policies sold for the year to date was 5% higher than in the first three quarters of 2020. All products, with the exception of fixed-term products, recorded growth in policy sales in the third quarter said LIMRA. For the first time in at least 25 years, every major product line saw rising policy sales in the first nine months of the year.
According to LIMRA, new annualized universal life insurance (VUL) premiums doubled 104% in the third quarter, growing the most in absolute dollars. While protection-oriented product sales – which provided growth at the beginning of the year – rose 46% in the third quarter, growth in accumulation-oriented product sales tripled from the third quarter of 2020.
VUL’s new annualized premium increased 78% year-to-date. VUL’s market share was 13% in the third quarter, five percentage points higher than last year and almost double what it was before COVID-19.
“The VUL sales in 2021 were remarkable,” said Carroll. “Low interest rates, strong stock markets and the recent changes in tax law (IRC 7702) have made VUL products more attractive to consumers and fueled their growth in recent quarters.”
New premiums for indexed universal life insurance (IUL) rose 21% in the third quarter, with two-thirds of IUF carriers increasing their sales and all but one carrier posting double-digit growth, LIMRA said. The IUF premium rose 18% for the first nine months of the year. IUF accounted for 26% of all individual life insurance premiums in the third quarter.
The new annualized premium for fixed UL increased 11% in the third quarter, mainly driven by sales of currently adopted products. However, the fixed lifetime warranty premium continued to decline, declining 13% in the quarter. Fixed UL rose 2% year-to-date. Fixed UL held 8% of the premium market share in the third quarter, reported LIMRA.
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Life insurance revenue growth slowed in the third quarter compared to growth in the first half of the year. New premiums for the entire life insurance business rose by 8% in the third quarter, which corresponds to an increase of 17% since the beginning of the year. 33% of total individual life insurance premiums received in the third quarter were for life.
“Increased consumer interest in life insurance and the expansion of accelerated underwriting programs have supported the sale of life insurance across all distribution channels,” said Carroll. “LIMRA forecasts double-digit growth in total life insurance sales for 2021 and sustained strong sales results through 2022.”
According to LIMRA, new premiums in term life insurance rose by 4% in the third quarter and by 7% in the year to date. The company predicts term premiums to grow by up to 8% in 2021, spurred on by continued consumer interest and online availability.
“COVID-19 has raised American awareness of the importance of adequate life insurance coverage,” said Carroll. “Our research shows that over a third (36%) of consumers said they would buy a cover this year. Our sales results suggest that many are pursuing this. Yet 102 million Americans live with a life insurance gap. Looking ahead to 2022, LIMRA will continue to lead the industry-wide “Help Protect Our Families” campaign, focusing on the underserved markets that rely on our products to ensure their families’ future financial security. “