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Indexed and Variable Universal Life Insurance Sales Outpace UL

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What You Need to Know

  • Millman's new study, based on a survey of 28 UL/IUL/VUL companies, included VUL products for the first time.
  • YTD through September 2020, respondents reported UL sales of $700 million, IUL sales of $1.5 billion and VUL sales of $254 million.
  • IUL sales for the first nine months of 2020 were 61% of total combined sales, up from 54% in 2018.

Milliman, a consulting and actuarial firm, this week released the results of its annual study of universal life, indexed universal life and variable universal life issues.

The new study, which was based on a survey of 28 UL/IUL/VUL companies, was expanded to include VUL products for the first time. 

Survey participants reported total combined individual UL, IUL and VUL sales of $3.5 billion and $3.6 billion for calendar years 2018 and 2019, and $2.4 billion for 2020 through September.

Year-to-date through September 2020, respondents reported UL sales of $700 million, IUL sales of $1.5 billion and VUL sales of $254 million.

Universal life sales in the first nine months of 2020 accounted for 28% for total UL/IUL/VUL sales combined, down from 37% in 2018. Indexed universal life sales in 2020 were 61% of total combined sales, up from 54% in 2018, and VUL sales rose to 11% from 9% during the same period.

The survey found that sales of combination riders on UL/IUL products remained strong. In 2020 to September, sales of chronic illness riders as a percentage of total sales were 7.7% for UL products and 46.3% for IUL products. 

In the same period, sales of policies with long-term care riders as a percentage of total sales were 66.1% for UL products and 10.3% for IUL products. 

Twenty-seven survey respondents said they use full underwriting of UL/IUL/VUL products, 22 use accelerated underwriting and six simplified issue underwriting. 

Ten participants reported the use of fluidless underwriting, but with substitute information as needed. Under this approach, when cases fail to meet the accelerated underwriting requirements, the underwriters seek substitute information to avoid paramedical visits with lab tests. 

Of the six survey participants that do not have an accelerated underwriting program, five said they plan to implement one. 

Nine study participants reported that they had increased the use of accelerated underwriting on UL products because of the coronavirus. One other participant said it does not officially offer accelerated underwriting on UL products, but made some limited temporary exceptions as the pandemic took hold.

With IUL products, the use of accelerated underwriting due to COVID-19 increased for 12 participants, and increased on VUL products for six participants. 

Seventeen of the 22 companies that write IUL business reported changes in illustrated rates for IUL products under Actuarial Guideline 49-A. The change in rates ranged from -120 basis points to +32 bps, with a mean of -38 bps and a median of -23 bps.

(Wikimedia)