Continued attraction to guarantees and growth potential, corporate sales and the anticipation of product changes related to revisions to Actuarial Guideline 38 all contributed to growth for all major life insurance product lines in the fourth quarter, according to Ashley Durham, senior analyst, LIMRA Product Research. “We haven’t seen a quarter in which all of the major product lines experienced growth since 2006,” said Ashley Durham, senior analyst, LIMRA Product Research.
The growth contributed to the third consecutive year of individual life insurance new annualized premium growth (6 percent in 2012), according to LIMRA’s fourth quarter 2012 individual life insurance sales survey.
In the fourth quarter, total individual life premium grew 12 percent. The number of life insurance policies sold grew by one percent for the year, making 2012 the second consecutive year of positive annual policy growth. The last time individual policy count increased two years in a row was in 1980/1981, when policy count grew three and seven percent, respectively.
Universal life (UL) new annualized premium had the strongest performance of all the products.
In 2012, UL market share was 40 percent of total new individual life insurance premium. Indexed UL climbed 42 percent in the fourth quarter and improved 36 percent for the year and now represents 30 percent of total UL premium, and 12 percent of all individual life insurance premium. While lifetime guaranteed UL (GUL) premium jumped 27 percent in the fourth quarter, it was primarily a reflection of a fire sale before the new reserving requirements took effect on Jan. 1, 2013, according to LIMRA. Despite the substantial growth in the fourth quarter, lifetime GUL only increased one percent in 2012.
Whole life (WL) new annualized premium also increased, which makes it the seventh consecutive year of growth for WL. In 2012, WL market share was 32 percent of total premium, which is the highest since 1998. WL policy count was up four percent for the quarter and up five percent in 2012.
Term premium increased in the fourth quarter. Positive growth was reported by about 60 percent of the writers in 2012. For the year, term premium was flat. However, LIMRA predicts term sales will pick up as economic factors improve.
Variable universal life (VUL) market share half of what it was in 2007. VUL premium increased, mainly due to sales of COLI and private placement, according to LIMRA. Despite the growth in the fourth quarter, VUL was unable to overcome the poor performance of the prior three quarters, so new premium was still flat in 2012.
