Little life in individual-life-insurance sales in 2009

New annualized premiums for individual-life-insurance policies were down in the fourth quarter and for the full year of 2009, with the most dramatic declines hitting variable universal life, according to LIMRA.
Total new annualized premiums fell by 5% in the fourth quarter of last year from the 2008 period, helping drag full-year sales down by 16%, according to LIMRA.
Though the results for the final quarter of the year are negative, they’re a marked improvement from the first half of the year, according to Ashley Durham, senior analyst for product research at LIMRA.
Indeed, new premiums declined by 26% in the first quarter of 2009 and 21% in the second. In fact, variable universal life experienced a massive decline in annualized premiums during the fourth quarter, falling by more than a third. All told, variable universal life ended the year with premiums down by nearly half.
Universal life experienced a boost in policies, with a 15% increase in the number of contracts during the fourth quarter. Still, annualized premiums for that period were down by 3% compared to the year-earlier period.
Year-to-date, the decline in annualized premiums totaled 20%, while individual policies increased by 5%. Ms. Durham noted that the decline in UL premiums and the increase in policy count shows that more small-face-value policies are being sold.
Another possibility: customers who are setting up their premiums could be underfunding their policies. “When times are tough, people might be inclined to set up a premium schedule that doesn’t sustain the policy for life,” Scott J. Witt, founder of Witt Actuarial Services LLC., noted. “They might set it up as if they’re going to fund it for 30 years and say that they’ll put in more when they get back on their feet.”