U.S. consumers spent a little less on new individual life insurance policies in the first quarter, but they ended up with more coverage.
Analysts from LIMRA have reported data on the U.S. individual life market in a summary of a life insurance issuer survey report. LIMRA received responses from insurers that account for about 80% of U.S. individual life premiums.
Both new annualized premiums and the number of new policies fell 1%.
The total amount of death benefits sold increased 8%.
- A link to LIMRA’s quarterly life sales report is available here.
- An article about LIMRA’s previous life sales report is available here.
One reason total death benefits increased so much, as new annualized premiums fell, is that consumers bought more, lower-priced term life insurance, and less whole life insurance.
Policyholders spend more on while life policies to get coverage that’s designed to last a lifetime.
A term life policyholder may face a big increase in premiums when the policy term expires, but the initial ratio of death benefits per premium dollar is higher.
Here’s what happened to annualized premiums from the policies sold in the first quarter, broken down by product type, when compared with annualized premiums for the first quarter of 2019:
- Term Life: +8%
- Variable Universal Life: +3%
- Whole Life: -1%
- Indexed Universal Life: -2%
- Traditional Fixed Universal Life: -6%
LIMRA does not give the dollar amount of sales in the survey report summary.
Elaine Tumicki, an executive who worked on the report, said in a comment included in the summary that term life sales were strong partly because of effects of the shift to the 2017 Commissioners Standard Ordinary Mortality Tables.
Another reason was the social distancing practices adopted to slow the spread of the virus that causes COVID-19, Tumicki said.
“Carriers reported to LIMRA that their online platforms were seeing more activity, as people sought coverage while they were home,” Tumicki said. “The majority of online life insurance sales are term products.”
— Read Individual Life Sales Grow, a Little: LIMRA, on ThinkAdvisor.