LIMRA forecasts U.S. individual life insurance sales to grow slowly but relatively steady over the next several years. LIMRA predicts overall new annualized premium (premium) to grow 2 percent in both 2018 and 2019. Because of the anticipated slowdown in the growth rates of disposable income and bond rates, LIMRA forecasts growth to dampen to 1 percent annually in 2020 and 2021.
Total premium for life insurance was $14.1 billion in 2016. LIMRA predicts premium will increase to $14.4 billion by end of 2017 and increase to $14.7 billion in 2018. In 2019, 2020 and 2021, LIMRA expects total premium to be $15.0 billion, $15.2 billion and $15.4 billion respectively.
Universal life premium will increase 3 percent in 2017, a result of growth in indexed UL premium coupled with a decline in UL products with lifetime guarantees. LIMRA predicts 2018 to experience 4 percent growth in premium. In 2019, premium growth slows to 2 percent and drops to 1 percent growth in 2020 and 2021 partly due to the forecasted slowdown in disposable income growth rates (according to Oxford Economics).
Following three years of considerable growth, whole life premium growth will be flat in 2017, a result of a very soft third quarter (premium declined for the first time in 14 quarters). Looking to the future, LIMRA expects whole life premium to rise 2 percent in 2018 and 4 percent in 2019. In 2020 and 2021, LIMRA is predicting whole life to grow 3 percent each year.
Term life premium will slow after a more moderate increase in 2017. LIMRA anticipates term premium in 2018 and 2019 to remain relatively level with 2017 results. There will be a slight increase in premium in 2020 and 2021, increasing 1 percent each year. Offsetting impacts from various economic factors are keeping term forecasts relatively flat.
Variable universal life (VUL) holds the smallest market share (6 percent of the total market), which can lead to a lot of volatility in sales growth. This makes year-to-year forecasting more difficult. Double-digit changes have occurred in three of the last five years. That being said, LIMRA is predicting 3 percent growth for 2018, -3 percent growth for 2019, -6 percent growth for 2020 and -3 percent growth for 2021. The negative growth starting in 2019 is partially driven by projected slowdowns in the equity market.
There are outside factors not considered in LIMRA’s current forecasts that could influence sales growth over the next four years, including the impact of product development and re-pricing from the change to 2017 Commissioner’s Standard Ordinary (CSO) mortality tables, expansion of automated underwriting, and new product regulation.