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Life Insurance Trends: What Lies Ahead?

Author

Karen R. Terry, FLMI
Corporate Vice President, Director of LIMRA Insurance Research
LIMRA and LOMA
kterry@limra.com

February 2026

The U.S. individual life insurance market enters 2026 on the heels of an exceptional year. Indexed and variable universal life (VUL) products drove double-digit premium growth in 2025, but the sustainability of this surge is uncertain. LIMRA’s forecast points to more measured growth ahead, shaped by economic volatility, evolving consumer preferences, potential regulatory change and the inherent challenge of sustaining this level of growth.

Economic Landscape

The economic backdrop is complex. Inflation is easing, yet prices remain elevated, interest rates are trending downward (but slowly), and unemployment is expected to rise through 2027. Equity markets, which heavily influence VUL performance, are projected to decline in 2026 before recovering in 2027. These trends create both opportunities and risks: lower interest rates will support premium financing for indexed universal life (IUL), shift whole life (WL) sales toward shorter-pay premiums, and put pressure on WL dividend scales. Stock market volatility could undermine VUL momentum.

Regulatory Environment

Regulatory conditions appear stable for now. The “One Big Beautiful Bill” permanently raised estate and gift tax exemptions to $15 million per person starting in 2026, reducing uncertainty in estate planning. While this change may dampen survivorship sales, uncertainty has a negative impact on estate planning sales, and clarity often stabilizes demand. Meanwhile, while the National Association of Insurance Commissioners (NAIC) released an exposure draft regarding potential changes in AG-49 — a guideline that governs how IUL policies are illustrated to ensure more realistic projections — it will take time for any changes adopted to be implemented.   

Looking ahead, term life insurance faces modest growth prospects, hovering around 2% annually. This is a predominantly middle-market product, which will be impacted as rising unemployment and consumer price sensitivity weigh on demand. WL is expected to grow slowly with more muted gains in the final expense market, reflecting the slowing economy.

Accumulation WL will shift back toward short-pay solutions, which should increase premium sales, and the projected interest rate decline will not have a significant impact on dividend scales. Some of this may be offset by an increased focus on universal life by some mutual carriers. Fixed universal life sales, which experienced a brief increase due to some life/long-term care hybrid products, continue to decline, challenged by low interest rates and competition from other products.

IUL remains a standout performer, with premium growth normalizing after a 21–25% surge in 2025 but staying positive thanks to favorable premium financing conditions. We are watching the potential growth of indexed variable universal life (iVUL) products, which could poach some sales from the IUL line. The extreme growth in VUL sales, buoyed by private placement sales in 2025, faces a slowdown as equity markets soften. Candidates that qualify for private placement are limited, making sustained year-over-year growth in this market more difficult.

At the total market level, total individual life premiums are projected to grow 8–12% in 2025 before cooling to 2–6% annually through 2027. The recent surge in accumulation-focused products will not last indefinitely, but simplified issue and final expense markets offer steady opportunities for carriers willing to adapt.

Figure 1. Individual Life Sales, 2018 — 2024 and Projected Sales 2025 — 2028

Annualized Premium in ($billions)

Mouse over the dots on the lines to see the values for each data point. Filter the data in this chart by clicking on a color in the chart legend.

Conclusion

Looking ahead, much depends on the health of the economy, equity markets, and consumer sentiment. Where it fits their business model, carriers should lean into simplified and final expense products to capture middle‑market demand and expand distribution in underserved segments.

Heavy concentration in interest-sensitive product lines and those with performance tied to stock or index performance may create some challenges if interest rates or equity markets move in unexpected directions. Broadening product portfolios and managing exposure to market volatility will be increasingly important. Monitoring regulatory developments on illustrations is also essential, as changes could alter competitive positioning.

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