Although universal life insurance market share rose 8 percent, overall individual life sales were down slightly last quarter. “People are choosing between buying a life insurance policy, and filling up their gas tank,” said Craig Simms, senior vice president of marketing at Connecticut’s Savings Bank Life Institute.
Universal life insurance is a hot item right now – probably because they often come with guarantees that let policyholders skimp on a few payments now and again, industry officials say.
In a survey of individual insurance product types, universal life came out the big winner in the first quarter of 2008: Its market share jumped 8 percent, while term, variable universal life and whole life insurance all dipped. Variable life was the only big loser of the quarter, dropping 26 percent in market share.
In universal life insurance, premiums and benefits can be adjusted as policyholders’ needs change, and most of the premium dollars go in an interest-earning account. But many universal policies have another advantage, said Alan Lurty, ING’s head of retail life business development: guarantees that they won’t lapse if a policyholder doesn’t pay in full.
Under these secondary guarantees, the policy will stay intact as long as the policyholder pays a certain minimum premium – even if other charges go unpaid, that policy will stay afloat, Lurty said. Those guarantees helped keep ING’s sales brisk last quarter.
“Universal life is definitely the popular product now,” said Ashley Durham, an analyst with LIMRA, the Windsor, Conn.-based life insurance researcher that did the survey. Durham added that other factors, like the vacillating stock market, have helped keep customers away from the other major types of life insurance.
Although many insurance companies are working to promote variable universal life products, for example, they’re still too expensive for many customers and too prone to the vaga-ries of the stock market, she said.
It’s a similar story for variable insurance. Variable insurance allows policyholders to allocate some premium dollars to investments within the insurance company’s portfolio, like stocks, bonds or equity funds. That means a shaky stock market will send policyholders scurrying elsewhere, she said.
While universal life brings in the greatest market share, Durham said, term life holds the title for most policies sold. Universal life’s customers are more affluent, but rarer than middle-market term policyholders. LIMRA also reported that the total premium amount stayed flat over the first quarter, but the total number of policies sold dropped one percent.
And that, said Craig Simms, senior vice president of marketing at Connecticut’s Savings Bank Life Institute, is a sign of the times.
“People are choosing between buying a life insurance policy, and filling up their gas tank,” he said.
