Limra Report: Q2 Premium Increase Continues

According to a recent research from insurance data provider LIMRA, the total new yearly premium for life insurance in the United States increased by 6% in the second quarter of 2022. Premiums in the space increased for the sixth quarter in a row. New premiums were 11% higher in the first half of 2022 than in the same period the previous year.

According to John Carroll, senior vice president and head of insurance annuities at LIMRA and LOMA, “strong sales of indexed universal life and variable universal life fueled total premium increase in the second quarter.” “The IRC Section 7702 change, which boosted premium caps, aided this.” “Overall, four out of ten life insurers, including more than half of the top 10 carriers, reported an increase in premiums.”

According to LIMRA, policy sales declined 11% in the second quarter and 9% year to far.

“Our study reveals that consumers are increasingly concerned about the impact of rising prices and a likely economic slump,” Carroll added. As a consequence, customers have reduced their expenditure, such as by purchasing less insurance or purchasing it later. “These economic concerns are true, but our business must emphasize the importance of life insurance to the financial stability of a family.”

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In the second quarter, new yearly premiums for indexed universal life (IUL) increased by 27%. This equates to a 33% rise in the first half of 2022. According to LIMRA, IUL premiums increased for two-thirds of all carriers, including eight of the top 10. Cash-value accumulation IUL products drove growth, accounting for 80% of IUL premiums. IUL premiums accounted for 20% of the overall US life insurance market in the first half, according to the research.

Following that, life insurance sales increase in the third quarter.

In the second quarter, new premiums for variable universal life (VUL) increased by 29%. This was their 19th consecutive winning quarter. In the first half of 2021, the price of new premiums increased by 38% when compared to the same period in 2021. Even while sales of VULs focused on protection increased by 5%, the majority of the gain came from products focused on accumulation, which increased by about 50% from Q2 to Q3. According to LIMRA, VUL had 13% of the premium market share in the first half.

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Fixed universal life new annualized premiums fell by 14% in the second quarter of 2022, after falling by 6% in the first half of the year. In Q2, the highest reduction was 32% for items with a lifetime warranty. Fixed UL’s market share in the US life insurance market remained stable at 7% in the first half.

Whole life (WL) new yearly premiums decreased by 3% in the second quarter compared to the second quarter of 2021, when they increased by 25%. Despite the dip, WL’s increase in new premiums was 3% greater than the previous year. According to LIMRA, WL accounts for one-third of the total US life insurance market.

Term product sales fell for the third quarter in a running. Term new premium was down 6% in Q2 compared to the same period last year and is down 4% so far this year. Six out of ten companies sold less premium products than they did in the second quarter of 2021. Term goods accounted for 19% of the US market in the first half of the year.

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“Term and whole life are the cornerstone products for most Americans who desire life insurance protection,” said Elain Tumicki, vice president and director of insurance product research at LIMRA. ” Even while whole life and term policy sales fell this quarter, they still accounted for 86% of all policies sold in the first half of 2022 “According to our findings, individuals have never had a higher need for life insurance. To close the widening coverage gap in the United States, the industry must take bold, imaginative initiatives to engage and educate Americans every year, not just during Life Insurance Awareness Month in September.

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