NU Online News Service, Nov. 29, 4:03 p.m. – Stock market turmoil hurt sales of individual variable life products in the third quarter, but it helped sales of other individual life products.

LIMRA International, Windsor, Conn., a nonprofit market research group, says member companies are reporting a 37% decrease in premiums from sales of new variable life policies from the third quarter of 2000, and a 26% decrease in premiums from sales of new variable universal policies.

But sales of new individual universal life policies are up 22% for the quarter, and sales of traditional whole life policies are up 8%, LIMRA says.

Policyholders are usually responsible for managing the investment of assets backing VL and VUL policies.

Buyers of UL policies and whole life policies leave investment decisions in the hands of life insurance company money managers. “The relative safety of these products is likely attractive to consumers in the face of the uncertain economic environment,” says Elaine Tumicki, the author of the third-quarter survey report.

LIMRA says changes in federal laws had a big effect on sales of term life insurance and insurance products used in estate planning programs.

Term life sales were down 1% from the third quarter of 2000, but that is a big improvement over results for the first half of 2001, LIMRA says.

The National Association of Insurance Commissioners, Kansas City, Mo., put term life sales on a regulatory rollercoaster in 1999, by endorsing a model regulation, Regulation XXX, that changed the way state insurance regulators treated reserves for term life policies that offer stable premiums and stable benefits for long periods of time.

Consumers worried that the regulation would increase prices rushed to buy term life coverage in late 1999 and early 2000, then sat back and rested. The strong results for the first half of 2000 made the first half of 2001 look artificially weak, LIMRA says.

Now, LIMRA says, the term life market seems to be settling down.

Meanwhile, life insurers that sell first-to-die life insurance, second-to-die life insurance and other “survivorship life” products are having to cope with the effects of the new Economic Growth and Tax Relief Reconciliation Act, which raised the possibility that the United States might eliminate estate taxes in 2010.

Survivorship life sales were down 40% for the third quarter, LIMRA says.

But LIMRA says survivorship life sales might improve once consumers understand how uncertain the estate tax relief provisions in EGTRRA really are.