Are you catching the cash value life insurance wave?
By Lew Nason
Insurance Pro Shop
In the wake of the current financial crisis, many American families (and advisers) are beginning to realize that the traditional definition of financial wealth — stocks, bonds, mutual funds, real estate holdings and retirement savings — is incomplete. Consumers looking for safety are becoming increasingly aware that permanent cash value life insurance can provide a solid foundation for their family financial plans. Accordingly, in their quest for real financial security, they are seeking to combine insurance and investment decisions in one plan, with permanent cash value life insurance playing a significant part. And recent sales figures are reflecting the trend.
According to LIMRA’s U.S. Individual Life Insurance Sales Survey, individual life insurance sales improved for the second consecutive quarter. In the second quarter 2010, total individual life insurance new annualized premium grew 7 percent, resulting in a 9 percent increase for the first six months of 2010.
"Posting a 9 percent increase, the results from the first six months of 2010 are encouraging for individual life insurance sales," said Ashley Durham, senior analyst, LIMRA product research. "Keep in mind — that's compared to the first half of 2009, which experienced the steepest six-month drop in individual life insurance sales in almost 70 years. Still, things appear to be looking up. In fact, 80 percent of the top 20 companies were up and nearly half of all companies experienced double-digit growth during the first half of this year."
For example, New York Life reported a 47 percent increase in sales of individual life insurance through September, 2010, with 34 percent of the total sold by agents.
Whole life (WL) continues to perform extremely well, and increased 23 percent in the second quarter. That's the fourth consecutive quarter of double-digit growth for WL and brings WL's market share to 31 percent of the total sales — the highest share since 1998.
Universal life (UL) also continued to show gains, with premium up 11 percent in the second quarter as compared to second quarter 2009. For the first six months of 2010, UL sales are up 13 percent.
Even the major independent broker/dealers are catching the wave. Their first-quarter sales of life insurance policies were up by at least a third, compared with a year earlier.
Raymond James reported their life insurance sales were up 34 percent in the first quarter of 2010, compared with a year earlier.
“Clients are more in a risk-management mode, so advisers who may have not been using life insurance as part of their practice, except in a reactionary way, are now more proactive because of the guarantees in the contract,” said James Swink, a vice president at Raymond James Financial Inc., who manages the firm's life insurance marketing and sales.
The one product whose premium didn't grow this quarter was term life insurance. New annualized premium for term dropped 11 percent for the quarter; down 7 percent year-to-date. We have not seen term show a drop in sales of this magnitude since 2001. However, the drops were offset by improved UL and WL policy sales.
This is all very good news for the dedicated financial adviser who understands and believes in the extraordinary value of permanent cash value life insurance.
Finally, according to LIMRA International, 35 million U.S. households today have no life insurance coverage whatsoever — a dramatic increase from 24 million in 2004 — with more than 40 percent of American households reporting they need more life insurance, the highest level ever reported.
The opportunity for knowledgeable, well-trained financial advisers to help people get the life insurance they need and want is staggering. When are you going to catch the cash value life insurance wave?