Limra: First-Quarter Sales of Guaranteed Universal Life Fall 48%, Drive Individual Life Drop of 7%
June 16, 2014 by Fran Matso Lysiak
Best’s News Service – June 16, 2014 11:41 AM
WINDSOR, Conn. – The first quarter of 2014 was off to a slow start as sales of individual life insurance in the United States, based on new annualized premium, declined 7%, according to Limra. Policy count dropped 4% in the quarter.
For all of 2013, total sales were flat, after three straight years of growth.
Limra pointed to a bright spot in the first quarter, however. “If you took guaranteed universal life out of the equation, total individual life premium would actually increase just under 1%,” Benjamin Baldwin, associate analyst, insurance research for Limra, said in a statement.
The decline is being driven by a drop in sales of universal life, particularly guaranteed universal life, which fell 48%, Baldwin said. “Responding to new reserving requirements implemented in 2013, we saw companies re-pricing or adjusting features on their guaranteed universal life products.”
A universal life policy with a secondary, or no-lapse, death benefit guarantee provides that if certain conditions are met, such as the payment of a certain premium, the policy won’t lapse. The UL no-lapse designs effectively guarantee that a policy will stay in force for a predetermined period of time, even if the policy account falls below zero — which typically triggers the lapse of a policy.
Market share for universal life represents 38% of total life insurance premium. But total new annualized premium for universal life dropped 15% in the quarter, according to Limra.
Improving 15% was new annualized premium for indexed universal life, which Limra attributed to several new entrants in the market and strong growth reported by nine of the top 10 writers of this line. Indexed UL is a permanent life policy that allows policyholders to tie accumulation values to a stock market index. These policies typically contain a minimum guaranteed fixed interest rate component along with the indexed account option.
Indexed UL represents 14% market share of total individual life premium. It now represents 39% of universal life sales
After 18 straight quarters of growth, new annualized premium for whole life insurance — a bread-and-butter product for many mutual life insurers — fell 3% in the quarter. Policy count also dropped 4%.
Premium for whole life represented 32% of the total individual life market in the quarter.
Stock market-linked variable UL recorded strong growth in the quarter, Limra said. Market share for this line, however, represented 6% of total individual life insurance premium. New annualized premium and policy count for variable UL each rose 20%, Limra said. The first quarter represented the sixth consecutive quarter of growth for this line.
Falling 4% in the quarter was new annualized premium for term life insurance, Limra said. Two thirds of term writers reported negative growth compared to prior year. However, term experienced significant growth in 2013 due to several companies reintroducing traditional term products replacing their term-UL products.
Term’s market share was 23% in the quarter.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
BN-NJ-6-6/17/2014-2014 1025 ET #
