Through the end of 2008, Standard & Poors Inc. projects life insurance sales to grow 2% annually.
The growth would be down from sales growth of 7% in 2006, says S&P, a division of the McGraw-Hill Companies, New York.
One reason sales increases was so high last year was that much of it came from strong sales of investor-owned (also known as stranger-owned) life insurance. IOLI-type life insurance policy ownership could put the future profitability of issuing insurers at risk, because insurance companies underwrite life policies with the assumption that a certain percentage of them will lapse, notes S&P in an outlook for the life insurance industry. As IOLI policies are bought as investments by major financial institutions, they are far less likely to lapse. This means life carriers will pay out claims on a far higher percentage of policies than they had assumed, S&P believes.