Clients Rush to Buy Variable Universal Life Insurance

The number of new term life policies sold fell, year over year.

Clients who bought U.S. individual life insurance in the first quarter were hungry for policies that were designed to do well when the stock market does well, according to new market data from LIMRA.

Variable universal life policies, or policies that combine a minimum level of policy cash value growth with the potential to do better when mutual fund-like investment funds flourish, were the clear sales leader.

The number of VUL policies sold increased 28%, year over year.

The amount of annualized premium revenue set to flow into those VUL policies climbed 50%.

Issuers of indexed universal life policies, or policies that link growth in policy cash value partly to the performance of investment indexes, also posted increases in the number of policies sold and annualized premiums.

Numbers for fixed universal life policies and whole life policies were mixed, and numbers for term life policies were down.

What It Means

In the first quarter, many clients were still making decisions based on the belief that, in the long run, investment markets will probably do well.

The new numbers are relevant to retirement planners as well as insurance advisors, because many purchasers of VUL policies, indexed universal life policies and other cash value policies use the policies in retirement income planning and long-term care planning arrangements.

LIMRA’s Take

Elaine Tumicki, LIMRA’s director of insurance product research, noted in a comment on the results that although whole life sales were lower than they were during the sales spike that occurred in early 2021, they were still above pre-pandemic levels.

“This suggests the increased consumer interest in life insurance and the financial protection it provides that began at the start of the pandemic has continued in 2022,” Tumicki said.

The Data

LIMRA is a nonprofit Windsor, Connecticut-based life insurance and financial services research group.

It bases its quarterly life insurance sales figures on results from an insurer survey. It estimates that the participants in the latest survey account for about 85% of the premiums from U.S. individual life insurance policies.

The total number of individual life policies sold fell 8% between the first quarter of 2021 and the latest quarter, but total annualized premium revenue from the policies sold increased 17%, LIMRA reported.

The survey report summaries available to the public show sales trends in terms of percentage changes. The public version of the summaries does not show the dollar value of the sales totals.

Here’s what happened to new annualized premiums from the sale of the types of policies shown in the public charts between the first quarter of 2021 and the latest quarter:

Here’s what happened to policy counts:

(Image: Shutterstock)

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