By Linda Koco

In 2003, individual universal life insurance premiums soared 28% ahead of UL sales in 2002, according to annualized premium figures just out from LIMRA International, Windsor, Conn.

Also, UL market share for the year was 35%–up from 28% in 2002, and close to ULs market share peak of 38% in 1985.

That makes individual UL the main life sales growth story for 2003.

The figures come from LIMRAs year-to-date assessment of quarterly sales results. This represents approximately 75% of the industrys individual life sales, says Elaine Tumicki, corporate vice president-products research for LIMRA.

Whole life insurance showed some growth in 2003, too, says Tumicki, noting WL premiums were up 7% and WL market share was 27% in 2003. However, among the top 10 WL insurers, only 5 reported increased WL sales in 2003, she says. Thats down from 2002, when 9 reported WL sales increases.

Also, although WL sales did increase in both years, the 2003 increase of 7% was lower than in 2002, when WL sales rose 13%, she says.

As for other key life insurance lines:

Term life premiums were up only slightlyby 1%. Term insurers reported diverse results, says Tumicki. “Some were up by as much as 36%, and those showing better-than-average growth had the newer return-of-premium term products in their portfolios. Meanwhile, other term carriers reported declines as low as 22%.”

Variable universal life insurance and fixed variable life insurance, combined, showed a decrease in premiums of 33% in 2003, when compared to 2002.

On an overall basis, U.S. individual life premiums were flat, says Tumicki. Also, total face amount was off by 2%, and policies sold were down by 4%. The flat sales may, in part, be reflecting the jobless recovery, she suggests.

A key sales stimulus on the UL side was the presence of long-term secondary guarantees, Tumicki says.

“I expect UL will continue to do well for at least awhile longer, because of that,” she says. “However, with the stock market coming back, it could be that VUL and VL sales will turn around and take business away from UL. Thats what happened in the 1990s, once the recession ended and the stock market rallied.”

Tumicki cautions against relying entirely on past market responses to gauge future plans concerning either product line, though. Right now, she explains, the market has been up for many months, but VUL and VL market share have not yet come back up.

The complexity of modern variable products may account for some of this slow response, she says. “Variable life insurance is not simple like term insurance.”

Besides, she says, “weve never had a period where variables were the significant product line when the nation is coming out of recession.”

The VUL/VL category was high before the last recession, she says, noting it reached its peak market share of 36% in 2001. But, with the onset of the recession, UL market share started rising and claimed the top spot by year-end 2002.

Other findings: The average premium per UL policy was $3,300 in 2003. “Thats smaller than the average for variable policies but higher than for term and WL policies,” Tumicki says. The average UL face amount in 2003 was $190,000.

As for survivorship sales, these showed a 1% increase in 2003 over 2002. “The UL version of the product was up 51%,” says Tumicki, “but the VUL version was down by 45%. The WL version accounted for the rest.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, March 5, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.