WINDSOR, Conn., Aug. 31, 2009 — After a 26 percent dive in the first quarter, individual life insurance annualized premium dropped 20 percent in the second quarter, according to LIMRA's U.S. Individual Life Insurance Sales report.
Overall, premium sales fell 23 percent for the year so far, and no product line was spared.
"Despite recording the steepest six month decline since the second half of 1942, the second quarter gave us reasons to be hopeful," said Ashley Durham, senior analyst, LIMRA product research. "Forty percent of companies were able to increase their total individual life sales over the second quarter of 2008 (this compared to less than 30 percent in Q1)."
Variable sales (with the strongest ties to the market) continue to suffer the most, down about 50 percent for the second quarter and 55 percent for the first half of the year.
Universal life (UL) sales were down 29 percent for the quarter and 27 percent for the first six months of 2009. This is the fourth consecutive quarter of double-digit declines. In addition to the poor economy, another likely factor affecting UL premium is a decline in sales to senior buyers, which tend to be higher face amounts and represented more than half of annualized premium sales in 2008.
Whole life and term continue to be the most resilient. Whole life fell three percent in the second quarter and four percent at the mid-year mark; while term dipped only three percent for both the quarter and year so far. Both products have maintained their 28 percent market share of new premiums issued.
Overall, policy count continued to drop in the second quarter, down four percent, six percent YTD. Every product except UL, which increased eight percent, experienced declines in the second quarter.
On average, companies sold slightly smaller policies during the first half of 2009 than they did this time last year. The average amount of coverage purchased for most products remained steady; however, new UL policies tended to be smaller, 18 percent lower than those purchased during the first six months of 2008.
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LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.