Lewis & Ellis Inc.

Life premiums keep on rising

Life Insurance and Annuities
by Stephanie Crownhart
Life premiums keep on rising
Life premiums keep on rising

Over the past few years, the life insurance industry has made a significant comeback in terms of people signing up for coverage. During the recession, and for a period after, many Americans eschewed these policies for financial reasons, while still understanding the value they provided. After years of recovery, many individuals are making their way back which is good news for all involved.

In the third quarter last year, new individual annualized life insurance premiums jumped 2 percent. This jump is equal to the increase seen over the entirety of the first nine months of the year, according to the latest U.S. Retail Individual Life Insurance Sales Survey from LIMRA. In addition, the total number of life insurance policies issued to consumers climbed 1 percent, and industry insiders expected that trend to continue for the remainder of 2016. If expectations are met, 2016 will be the first year since 2012 in which the industry saw two straight years of consecutive growth.

Consumers are pushing life insurance sales up once again.Consumers are pushing life insurance sales up once again.

Breaking down the numbers
During the third quarter, consumers were far more interested in whole life policies, which surged 9 percent on an annual basis, and was up 8 percent year to date, the report said. Meanwhile, universal life took a small step back, falling 2 percent for both the quarter and the year to date. In addition, indexed universal life premiums didn't budge on an annual basis, but that countered a 7 percent drop seen in the previous quarter, so this too can be seen as being mostly positive.

"Whole life sales, which have experienced 10 consecutive years of positive growth, played an integral role in overall life insurance sales growth this quarter," said Ashley Durham, associate research director, LIMRA Insurance Research. "Continued market volatility and low interest rates make whole life products attractive to consumers looking for protection and steady investment growth."

Getting to know the options
One of the biggest issues that consumers actually face when they try to buy life insurance these days is that there are so many policies from which they can choose, according to a report from Physician's Money Digest. Often, they don't know what the difference is between whole life and term life, let alone whole and universal coverage. The value of each product will vary significantly depending upon each policyholder's needs and financial situations, and it's therefore vital to do a bit of research into which product will work best for them.

On some level, most in the industry would agree that it's incumbent upon individuals to know what they're buying and what they need in terms of life insurance, but it's not always easy to find that information, the report said. Since the process can sometimes be complicated - especially for first-time buyers - it might be wiser for brokers or insurers to make sure they're working carefully with all prospective clients to allow them to successfully navigate the process and properly protect their loved ones going forward.

The more life insurers themselves can do to help potential and even current clients understand what will work best for them, the better off all involved are likely to be. Often, consumers may have a dour view of the financial benefits of life insurance products simply because they don't always understand what the actual cost of coverage will be. Education efforts may be key to bridging that gap.



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