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Record Growth in Life Insurance Premiums Continues in 2023, Says LIMRA

Sustained Growth in Life Insurance Market Amid Pandemic Recovery

The life insurance sector has witnessed remarkable growth for the third consecutive year, with new annualized premiums reaching a record $15.7 billion in 2023, according to LIMRA’s U.S. Life Insurance Sales Survey. This increase, though modest at 1%, marks a significant recovery from the pandemic’s impact, which had previously disrupted normal sales activities. John Carroll, LIMRA’s Senior Vice President of Life & Annuities, attributes this resilience to the industry’s accelerated digitization efforts, which have not only improved the customer buying experience but also adapted to the changing economic landscape bolstered by a strong economy and sustained consumer interest.

Product-Specific Trends and Future Outlook

The detailed breakdown of sales across different life insurance products reveals varied performance. Whole life insurance saw a slight increase in premiums with a 1% rise to $6.1 billion in 2023, representing the largest market share at 39%. On the other hand, term life insurance enjoyed more robust growth, with premiums increasing by 5% to nearly $3 billion, driven by ongoing demand for affordable coverage options. Notably, indexed universal life (IUL) and variable universal life (VUL) insurance products also showed significant movements; IUL premiums fell slightly by 4% yet saw a dramatic 19% rise in policy count, whereas VUL led premium growth in the fourth quarter, jumping 11% to $536 million due to strong performance from a handful of carriers.

Challenges and Predictions for the Coming Years

Despite the overall positive trends, the life insurance industry faces potential challenges, including inflation and unemployment risks that could impact sales, particularly in the term life market. Karen Terry, Assistant Vice President at LIMRA, forecasts moderate growth of 1-3% in term life sales over the next two years, assuming economic conditions stabilize. Furthermore, fixed universal life sales are expected to decline due to shifts in carrier focus towards more dynamic products like IUL and VUL, reflecting changing consumer preferences and the broader financial landscape. Overall, LIMRA anticipates a normalization of life insurance sales growth, with potential increases of up to 5% annually through 2025 as the market adjusts to post-pandemic realities and evolving consumer needs.