Life Insurance Sales Increase 2% In 2Q As Agents Adapt To COVID

The data is in and it was a good news, bad news second quarter for life insurance policy sales — and COVID-19 impacts were felt all over.

Total individual life insurance new policy sales increased 2% in the quarter, but new annualized premium fell 5%, compared with second-quarter 2019 results.

Year-to-date, total policy count was up 1% and new annualized life insurance premium dropped 3%, according to LIMRA’s Second Quarter 2020 U.S. Individual Life Insurance Sales Survey.

“COVID-19 definitely affected life insurance sales this quarter. Despite the decline in new premium, nearly half of companies reported growth in policy sales, citing increased consumer interest due to the pandemic and their ability to sell products without meeting face-to-face,” said Elaine Tumicki, corporate vice president, LIMRA Insurance Research. “In LIMRA surveys conducted this spring, U.S. carriers reported expanding automated underwriting and taking other measures to make it easier for consumers to apply for life insurance while adhering to social distancing guidelines.

“As a result, direct-to-consumer sales propelled the growth in whole life policy sales but declines in other distribution channels muted the extent of this growth.”

While less than half of carriers sold more term policies than the second quarter of 2019, overall policy sales increased 6% in the second quarter 2020. Term new annualized premium climbed 3% in the second quarter, with nearly half of the carriers reporting growth and a third (32%) reporting double-digit growth.

In the first half of 2020, term new annualized premium was 5% higher than prior year and policy count rose 6%, compared with prior year results. Term market share was 24% second quarter year to date. Since 2011, term premium market share has been in the 21-22% range.

‘Double-Digit Drop’

Whole life (WL) new annualized premium fell 8% in the second quarter, decreasing 5% for the first six months of the year. However, WL policy count was up 3% in the second quarter but ended the first half of 2020 down 1%, compared with the first six months of 2019. WL held 35% of the market in the first half of 2020.

“Direct-to-consumer WL contributed significantly to the increase in new WL policy sales in the second quarter. WL policies sold directly from the manufacturer surged 32%, compared with prior year results,” noted Tumicki. “Declines in affiliated distribution channel sales dampened growth for the quarter. Overall, more than half of WL carriers reported lower sales this quarter and nearly half experienced a double-digit drop in premium and policy sales.”

Universal life (UL) new annualized premium plunged 12% in the second quarter with fixed UL falling 21% and indexed UL dropping 8%. Year-to-date, UL new premium was down 8%.

“Ultra-low interest rates undermined the fixed UL market. Three quarters of fixed UL carriers experienced sales declines in the second quarter,” said Tumicki. “IUL carriers also continue to struggle under the current economic environment. Two-thirds of IUL carriers’ sales fell in the second quarter.”

UL policy sales tumbled 15% in the second quarter and 11% year to date compared with prior year results. UL market share was 34% of the total U.S. life insurance market in the first six months of 2020.

Variable universal life (VUL) new annualized premium jumped 17% in the second quarter 2020, however only seven carriers reported increased VUL premium in the quarter.

VUL policy sales were down 4% in the second quarter, ending the first half of 2020 up 1%. VUL market share was 7% second quarter year to date.

LIMRA’s Second Quarter 2020 U.S. Individual Life Insurance Sales Survey represents approximately 80% of the U.S. individual life insurance annualized premium market.