Strong sales of universal life insurance are continuing to buoy the U.S. life market.[@@]
Revenue from new U.S. individual life sales was 10% higher during the first quarter than it was during the first quarter of 2003, according to LIMRA International, Windsor, Conn.
The number of policies sold rose only 1%, but the face amount of each policy sold rose about 9%.
Back in the go-go 1990s, interest-sensitive universal life appeared to be going the way of mood rings and poodle skirts. Today, crediting rates are much lower, but years of stock market turmoil have increased the appeal of UL policies. Thanks to consumers’ new hunger for safety, UL sales soared 30% in the first quarter, LIMRA reports.
But other products also did well. Sales of whole life increased 2% and sales of term life increased 9%.
Sales of variable and variable universal life, which give holders a chance to manage investments in accounts that resemble mutual funds, were down 8%. Although variable-product sales continued to fall, the rate of decline has slowed, and many of the top 20 players in the variable-product market reported double-digit increases in first-quarter variable-product sales, LIMRA says.
Variable products “may be starting to turn around,” says Elaine Tumicki, head of LIMRA’s product research unit.
The stock market performed well in 2003 and has held steady during the first half of 2004. In 2003, Tumicki noted that changes in variable life product market share tend to be about a quarter behind shifts in stock market performance.