Indexed universal life (IUL) products were the dominant driver behind premium growth in second quarter according to LIMRA, Windsor, CT.
Consumers appear to be interested in being able to build cash value growth while protecting their principal and IUL products allow them to do so, rendering the products an alluring option for consumers.
Over the first half of 2012, IUL sales were up 29 percent, accounting for over 25 percent of all universal life (UL) sales.
Total UL annual premium grew six percent in the second quarter, growing three percent in the first six months of 2012. There have been 13 continuous months of policy count growth while in the first six months of 2012, UL policy count grew three percent.
Overall UL sales were weakened by lifetime guarantee (LTG) UL premiums, which dropped eight percent. Although LTG products accounted for the highest share of new UL premium (35 percent), IUL products are narrowing the gap; in 2009, there was a 40 percentage-point gap between LTG UL and IUL. Today, that gap has closed to just ten percentage points.
Whole life (WL) proved to be the second biggest driver of growth with premiums rising nine percent for the second quarter and nine percent year-to-date. After almost three quarters of WL writers recording positive growth, policy count improved three percent in the quarter, up a total of five percent for the first half of 2012. WL market share was the highest since 1998 at 33 percent in the second quarter.
Variable UL premium dropped six percent in the second quarter, down seven percent in the first six months. Less than 25 percent of VUL writers were able to increase their sales over the first half of 2011.
Term premium growth fell three percent in the second quarter after positive growth in the first quarter. Just over half of term manufacturers increased their sales during the first six months of 2012. Term policy count was down three percent during the second quarter and was flat year-to-date.
Total life insurance new annualized premium grew four percent in the second quarter resulting in three percent growth for the first half of the year. After five consecutive quarters of growth, policy count was flat for the second quarter, year-to-date, policy count was up three percent.