UL Sales Soared, VL Plunged Last Year

“Perhaps consumers–or, more likely, producers–are more comfortable with the guarantees of WL and UL during the current volatility in the stock market” she says.

However, marketers should keep the WL results in perspective, cautions Tumicki. “Until 2001, WL sales had been down every year for the past 10 years,” she points out. “Also, the strong showing in 2001 was driven mostly by one company, which reported spectacular WL sales for the year.”

With the top WL sellers results removed, total WL sales in 2001 showed only 2% growth over 2000, she says.

Her take on the trend: “The WL industry is on a comeback, but its not as strong a comeback as some had predicted last year.”

The industry wont be able to reach a full assessment until the middle of 2002, she adds. Thats when submitted business in the 4^th quarter will have been completed.

What about term life sales? The annualized premium, though down 9% for the year, was actually up by 8% for the 4th quarter, says Tumicki. “This suggests that term sales are back on track,” following the huge increases in sales that were spurred by implementation of Triple-X reserve regulations in 2000.

Many of those sales were made in late 1999 but recorded in the first two quarters of 2000. Then, sales dropped sharply, and by early 2001, “term sales looked horrible in comparison to 2000.” Yet, when 2001s term sales are compared to term sales in 1999, the 2001 results “arent that bad,” she says. “They are more like they were in 1999.”

In fact, she says, a new term insurance study LIMRA is about to publish shows the surveyed companies believe Triple-X has had “little or no” impact on the term market.

As for the survivorship market, Tumicki notes annualized premiums were “down substantially”–by 26%–for all products in that marketplace during 2001. Continuing uncertainty over estate tax repeal probably contributed to this downturn, she speculates.

Where survivorship VUL is concerned, this former top seller saw an annualized premium decline of 39% in the 4^th quarter and of 27% in 2001, compared to year earlier results. Most likely, the continuing stock market volatility in 2001 played a big role in this, Tumicki says.

All year long, Tumicki recalls, insurers focused on educating producers about the estate tax repeal. They pointed out it is a “phantom repeal” that makes estate taxes disappear only for the year 2010. As advisors–and their clients–understand that, she predicts, survivorship life sales should begin to rebound, probably later in 2002.

Reproduced from National Underwriter Life & Health/Financial Services Edition, March 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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