Life insurance sales suffered greatly from several disruptions in the first quarter, posting sales losses across the board, Wink, Inc. reported today.
Traditionally, life insurance sales struggle in the first quarter because of the ramped-up sales efforts to close out the previous year, noted Sheryl Moore, CEO of both Moore Market Intelligence and Wink. Still, it was a terrible quarter, she added.
Non-variable universal life sales for the first quarter were $727.2 million, down 15.3% compared to the previous quarter and down 1.3% compared to the same period last year. Non-variable universal life sales include both indexed UL and fixed UL product sales.
Unlike other investment products, rising interest rates is not helping life insurance.
“My take is that the life insurance products haven’t been able to take advantage of increased rates as much, just because they primarily use portfolio crediting, rather than new money,” Moore explained. “Second quarter will also be a challenge because of the adoption of AG49-B.”
As of May 1, the National Association of Insurance Commissioners’ Actuarial Guideline 49-B requires that index accounts cannot be illustrated above the benchmark index account and the maximum illustrated rate must include bonuses, according to Gregory Rohtstein, a Symetra assistant vice president who outlined the guideline during an NAIC webinar. The guideline also limits illustrated rates to a maximum of 145% of whatever an IUL portfolio is earning.
AG 49-B amends AG 49-A and in the latest NAIC attempt to rein in IUL illustrations, particularly around uncapped volatility-controlled indexes with a fixed bonus. AG 49-B is seen as a patch until the NAIC reopens illustration regulation.
Noteworthy highlights for total non-variable universal life sales in the first quarter included National Life Group retaining the No. 1 overall sales ranking for non-variable universal life sales, with a market share of 12.7%. Transamerica Life’s Transamerica Financial Foundation IUL was the No. 1 selling product for non-variable universal life sales, for all channels combined for the eighth consecutive quarter.
Indexed life insurance sales for the first quarter were $632.6 million, down 15.9% compared with the previous quarter, and up 0.4% compared to the same period last year. Indexed life sales include both indexed UL and indexed whole life.
Fixed UL sales for the first quarter were $94.9 million, down 11.3% compared to the previous quarter and down 11.6% compared to the same period last year. Noteworthy highlights for fixed universal life included the top primary pricing objective of No-Lapse Guarantee capturing 50.4% of sales. The average UL target premium for the quarter was $4,690, a decline of nearly 14% from the prior quarter.
Whole life first quarter sales were $1 billion, down 11.8% compared with the previous quarter, and down 4.7% compared to the same period last year. Items of interest in the whole life market included the top primary pricing objective of Final Expense capturing 58.7% of sales. The average premium per whole life policy for the quarter was $4,127, an increase of nearly 6% from the prior quarter.