Uncertainty Pushes Sales Higher

Now more than ever before, older clients want the guaranteed returns and risk protection life insurance offers.


Many older clients have developed stock-market fatigue. At the same time, though, yields on conservative fixed-income investments have dropped to historic lows. That combination makes the guaranteed returns and risk protection benefits available with cash-value life insurance look attractive again.

Sales figures reflect consumers’ interest in the products. LIMRA reports that overall in 2011, life insurers issued 2 percent more individual life policies than in 2010. That’s modest growth, but LIMRA notes it’s only the fourth time policy sales have increased in the past 30 years. If you’ve been overlooking life insurance as an asset class with your senior-market clients, you might be missing an opportunity. Here’s a recap of what’s selling and what’s not:

Whole Life

Whole life enjoyed its sixth consecutive year of growth in 2011 according to LIMRA. Premiums paid increased 9 percent while the number of policies grew by 5 percent over 2010. “Our research shows that the three most important things buyers look for when they’re purchasing life insurance are premium and coverage guarantees and lifetime coverage,” says Ashley Durham, a senior analyst with LIMRA in Windsor, Conn. “These preferences are likely compounded during times of uncertainty and whole life offers all three.”

Universal Life

The results for universal life (UL) were solid overall for 2011. Premiums (3 percent rise) and policy counts (8 percent increase) were higher with the growth driven by indexed UL products. Those products’ premiums increased 38 percent in 2011, representing about 25 percent of UL premium sold for the year; policy count rose 30 percent. Variable UL (VUL) sales were 22 percent higher for the year, although the number of policies fell by 9 percent. That decline marks 29 consecutive quarters of VUL policy count declines.

Although sales of lifetime UL captured 40 percent of the annualized premium in 2011, sales dropped 7 percent. LIMRA attributes this decline to price increases and companies leaving the market. Gene Lunman, senior vice president of Retail Life & Disability Products at MetLife in Bloomfield, Conn., also expresses caution on this UL segment. “We’ve had strong universal life sales but MetLife, like the industry, now is pulling back on the pricing there and increasing rates,” he says. “Because of the interest rate situation we’re in right now, that is a product that has an embedded risk on interest rates. We, like many other competitors, are raising prices there and that’s having a negative impact on sales on that product right now.”

“Our research shows that the three most important things buyers look for when they’re  purchasing life insurance are premium and coverage guarantees and lifetime coverage.”  ~ Ashley Durham, LIMRA

Combination Life/LTC policies

It was also a good year for life policies that offer long-term care (LTC) benefits. According to LIMRA’s “2011 Individual Life Combination Products Annual Review,” these products grew 56 percent in 2011, representing the third consecutive year of double-digit growth. Total new premium for life combination products reached $2.2 billion in 2011, approximately 13 percent of total individual life insurance new premium. More than 72,000 combination policies were sold in 2011, which make up approximately 16 percent of all long-term care insurance policies and contracts sold in 2011.

In a press release issued on April 23, Elaine Tumicki, corporate vice president and director LIMRA product research, noted that sales of life combination products continued to grow at a “remarkable” rate, especially coming off the double-digit growth experienced in 2009 and 2010.

LIMRA reported that all life combination product lines grew in 2011, with universal life (UL) combination products becoming the dominant product (increasing 67 percent in premium compared to 2010). Whole life (WL) and variable combination premium grew 16 percent and 17 percent, respectively. Linked benefit products, primarily single premium and all-in-one packaged products, grew 66 percent in policy count, capturing 29 percent of the market in 2011 (an increase from the 21 percent market share held in 2010). Acceleration policies, which provide LTC benefits up to the amount of the life death benefit and are more commonly riders that can be attached to many of the products in a carrier’s life product portfolio, grew 29 percent, attaining 71 percent of market share (by policy count).

LIMRA’s study also found that consumers under age 59 held more than half of in-force polices in 2011. Similar to long-term care insurance, a greater number of life combination policies are insuring women with almost six in 10 policies in force covering women.


Last year wasn’t a good year for term policy sales as both premiums (minus 6 percent) and policy count (minus 4 percent) were down. The soft economy, combined with several insurers’ shift from term to term UL, are two of the main factors in the recent decline, says Durham. Nonetheless, advisors shouldn’t write off term’s possible use with clients seeking lower cost insurance: LIMRA’s research shows that term represents 65 percent of outstanding coverage and nearly 40 percent of all new individual life policies issued in the U.S.

“We’ve had strong universal life sales but MetLife, like the industry, now is pulling back on the pricing there and increasing rates.” ~ Gene Lunman, MetLife

By Financial writer, Ed McCarthy, CFP for the September 2012 issue of Senior Market Advisor.


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