You may not know it from looking at the most recent sales statistics, but now is a terrific time to be selling indexed universal life (IUL).

While several challenges have recently hampered the sales of the up-and-coming product, IUL is positioned to increase sales more than any other interest-sensitive product this year. In fact, current market conditions make this the best time to start selling IUL.

First, the bad news. Sales of IUL for the first quarter of 2009 were $105.5 million, down 33 percent from the previous quarter. Why the big drop? The fourth quarter of every year is always a big push for sales. Agents and IMOs want to get their cases submitted and paid, in order to qualify for any trips or incentives. For this reason, since 2002, the fourth quarter of each year has brought in more sales of IUL than the first three quarters. It’s just hard to surpass a bar that is already set pretty high.

Recent ratings downgrades have also contributed to the decline in indexed life sales. Nearly half of the carriers in this market have been downgraded in the past six months. Some companies have also been damaged by the stigma of receiving TARP funds; this alone can virtually erase a company from an IMO or broker-dealer’s list of approved carriers. In addition, some carriers’ parent companies may have been negatively spotlighted by the mainstream media. These issues will continue to haunt the overall life insurance industry until the market improves.

Some of the most competitive companies in the indexed life market have been forced to make recent commission reductions. They are not alone. If you sell any form of insurance or annuities, you are bound to see changes to contracts due to current capital constraints. Term life insurance is being repriced, commissions and bonuses are dropping on annuities, and rates are dropping on universal life. If the product you are currently selling hasn’t been affected, give it a month or two. It will hit.

Another interesting factor that has led to the sudden drop in IUL sales is the transition to the 2001 Commissioners Standard Ordinary (CSO) tables. When it comes to mortality charges, Congress and the IRS have issued requirements for companies offering life insurance. Most recently, the IRS informed insurance companies that beginning Jan. 1, 2009, the companies would need to reprice products using the new 2001 mortality tables. Many companies waited until the last minute to roll out 2001 CSO products, which resulted in a challenge to their distribution channels, which were now required to learn a new product overnight. Give it time, however, and the comfort level will return, resulting in increased IUL sales.

Now, the good news: The time is right for IUL, despite these challenges. Consider the change in the economy since 2008. This is the second time the stock market has taken a dive since the turn of the century. The best time to offer IUL to your clients is when the market is volatile.

First, your client is always protected for any market downturns — they’ll never lose a penny because of a stock market collapse.

Second, when an IUL policy ends its crediting measurement at a low point in the market, this is the beginning measurement for the next year’s index crediting. So, the IUL policy could receive continuous maximum crediting potential while the market rebounds. This is a strong value proposition compared with products such as variable universal life, because this securities product merely has a chance to return to square one upon recovery. And if that isn’t enough, indexed life policies also offer a minimum guaranteed interest, regardless of market performance.

There are 55 different indexed life products being offered by 29 different insurance carriers. You should evaluate these products carefully, to see which are the best for your client. The IUL Directory, available online at www.AgentsSalesJournal.com/IULDirectory, is a good place to start your evaluation; if you are interested in this market, carefully evaluate illustrated rates on the products, review the guaranteed and current charges, and be leery of any programs promising to help your clients “make money with the IUL.”

On the other hand, you should also thoroughly review the product rates, bonuses, and rolling targets, as they can each offer valuable incentives to you and your clients.

Ultimately, you are facing replacements and losing out on sales if you don’t sell indexed life. It is the perfect product for risk-averse consumers who want a potentially better credited rate than traditional fixed rate insurance plans can offer.

Sheryl Moore is president and CEO of LifeSpecs.com, an indexed product resource. She can be reached at www.indexedannuitynerd.com.