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Universal Life Insurance Sales Plummet in Q1

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What You Need to Know

  • Market volatility and persistent low interest rates contributed to the downward trend, Wink’s sales and market report found.
  • Universal life shows little hope of increased sales in the near future, despite the recent steady and slow interest rate increases.
  • Still, whole life sales rose 4.5% from the previous quarter and were up 4% from a year ago.

Life insurance sales continued their downward trend in the first quarter, affected by market volatility combined with persistent low interest rates, according to Wink’s sales and market report, released this week.

Total non-variable universal life sales for the first quarter finished at $649.9 million, down 12.2% from the previous quarter and down 15.6% from the same period a year ago. Non-variable UL sales include both indexed UL and fixed UL. 

Indexed life sales took the biggest hit in the January-to-March period, down 14.6% from the fourth quarter and down 0.7% year over year. Total sales amounted to $530.6 million. 

“This was obviously going to be a tough quarter for life insurance sales,” Sheryl Moore, Wink’s chairwoman and chief executive of Moore Market Intelligence, said in a statement. 

“No sooner than we have products repriced for 2017 CSO, we have to reprice for AG49. And now that AG49 is under our belts, everyone is looking at the prospects of repricing for 7702. When product development is active, sales suffer.” 

Fixed universal life sales continued their rapid decline, despite an 0.6% positive spike in the first quarter; fixed UL is down 50.9% compared with the same period in 2020. Sales at the end of March totaled $119.7 million.

“Seeing Universal Life hit rock bottom is a personal low for me,” Moore said. “I remember developing the most competitive GUL in the life insurance industry 17 years ago; back then, I never would have foreseen that sales would get this bad.”

The report noted that insurance companies continue to exit the UL market because of the costs required to reserve for these products, relative to the potential for sales when average credited rates float at 3.05%. It said UL shows no hope of increased sales in the foreseeable future, even with the recent steady and slow increases in interest rates.

Not all first-quarter results were grim. Whole life sales increased 4.5% from the previous quarter and were up 4% from a year ago. Sales closed at $1.1 billion.

“As forecasted, whole life sales are going to continue to be strong for the foreseeable future,” Moore said. “The guarantees become more valuable during periods of sustained low interest rates.” 

Q1 Takeaways

Universal life sales stand in the shadows of sales levels on whole life products, according to the report. Traditional universal life (and therefore guaranteed UL designs) will continue to wane, it said, noting that most insurance companies are doing R&D on offloading their UL blocks of business. 

Indexed life sales will build momentum, but will likely never achieve their pre-AG49 heyday, the report said. 

As yet, Wink does not track variable UL sales. Even so, it expects this line of business to attract increased interest from insurance companies looking to diversify their lineup and offer consumers an attractive cash value life insurance offering.