Substantial growth in whole life and term product sales drive overall increaseA new survey from LIMRA reveals total new annualized premium was $4.04 billion in the second quarter 2% higher than prior year.
WINDSOR, Conn., Aug. 1, 2023—After three consecutive quarters of declining premium growth, total U.S. life insurance new annualized premium was $4.04 billion in the second quarter, a 2% increase, according to the preliminary results from LIMRA’s U.S. Retail Individual Life Insurance Sales surveys and estimates.
“Overall, whole life and term products recorded the highest premium growth, propelling the positive results this quarter,” said John Carroll, senior vice president, head of Life & Annuities, LIMRA and LOMA. “Whole life and term products typically serve the middle-income market. As economic conditions continue to improve, consumers may have felt more confident to purchase coverage to address their life insurance needs and protect their families’ financial security.”
The growth in premium in the second quarter was coupled with an increase in the number of policies sold. Policy count rose 4% in the second quarter, compared with the prior year. This is the second consecutive quarter of policy sales growth.
While new annualized premium fell 3% to $7.8 billion in the first six months of 2023, policy sales increased 4% over the same period in 2022.
Whole life new premium jumped 6% to $1.6 billion in the second quarter, marking the largest growth in premium since first quarter 2022. Year-to-date (YTD), whole life new premium increased 1% to $3.1 billion. In addition to the premium growth, policy sales also rose, up 3% in the second quarter and 4% YTD. Whole life premium represented 40% of the total U.S. life insurance market in the first half of 2023.
For the second consecutive quarter, term products recorded positive sales growth. With about half the companies reporting increases, term new premium totaled $776 million, up 6% in the second quarter. In the first half of 2023, term new premium was $1.5 billion, an increase of 3%, compared with prior year results. Policy sales also saw a boost in the second quarter, up 4% for the quarter and 2% YTD. Carriers were most likely to report an increase in consumer interest and a growing use of automated underwriting as reasons for the growth in 2023. Term life premium held 19% market share in the first six months of 2023.
Indexed Universal Life
After double-digit premium growth in 2022 driven by changes in IRS tax code 7702, indexed universal life (IUL) product sales continued to normalize. Second quarter IUL new premium was $937 million, down 3% from prior year. YTD, new premium fell 10% compared with the first half of 2022. The growth in number of policies sold remained high in the second quarter, up 22%, resulting in a 23% increase YTD. IUL premium represented 23% of total U.S. premium sold YTD.
“The increased sales of smaller IUL policies continued following the May 1 implementation of NAIC model (AG-49B),” said Karen Terry, assistant vice president, head of LIMRA Insurance Product Research. “The new NAIC model will likely continue to have an adverse effect on IUL premium while policy sales are expected to increase among a wide range of carriers including those selling in a lower face market.”
Variable Universal Life
Variable universal life (VUL) premium increased 3% in the second quarter to $478 million. The number of VUL policies sold in the second quarter fell 2%. YTD, VUL premium totaled $899 million, down 1% following the 40% growth experienced in the first half of 2022. Policy sales dropped 10% in the first half of the year. VUL premium represented 12% of the total U.S. life insurance market in the first half of 2023.
Fixed Universal Life
After four consecutive quarters of declines, fixed universal life (fixed UL) new premium surged 11% in June lifting second quarter growth out of a four-quarter decline. Sales were up 1% in the second quarter at $265 million. YTD, fixed UL new premium was $503 million, 8% lower than the prior year’s results. The number of policies sold, however, dropped 12% for the quarter and YTD. Fixed UL premium held 6% market share in the first half of the year.
LIMRA’s Fact Tank
LIMRA’s preliminary second quarter 2023 U.S. individual life insurance sales results are based on monthly reporting and preliminary quarterly survey data, representing 80% of the total market. A summary of the results can be found in LIMRA’s Fact Tank.
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