Unless you were selling
fixed annuities and whole
life insurance, the fourth
quarter of 2008 was one
to forget. The two products were the
only bright spots in an otherwise bleak
period, according to LIMRA's final
quarterly survey for the year.
New annualized premium for
individual life insurance dropped 14
percent in the fourth quarter of 2008,
ending the year with an overall 7 percent
decline. Annuities fared somewhat
better, ending the year up three points.
While sales of variable annuities
slumped, fixed annuity sales soared
79 percent in the fourth quarter to
end 2008 at a record-setting singleyear
figure of $109.4 billion, which
kept overall annuity sales growth in
LIMRA reported that the fourth
quarter marked the single sharpest
decline in life premium since the fourth
quarter of 1951. The overall decline for
the year erased the strong 7 percent
gain of the previous year and was the
largest one-year decline in LIMRA's
records. The last significant annual
decline was in 1991, coming off a mild
recession, when premium fell 5 percent.
The increase in whole life (WL)
premium was a plus, though. Following
a third quarter resurgence of 7 percent,
whole life sales increased 2 percent in
the fourth quarter, ending 2 percent
higher for the year.
Universal life (UL) sales fell 23
percent in the fourth quarter. Variable
universal life (VUL) products continued
to follow market trends, dropping
18 percent in the fourth quarter, finishing
the year down 17 percent. Term life
premium was down 3 percent for the
quarter and 2 percent overall in 2008.
Number of policies sold was down
10 percent in the fourth quarter, and
finished the year down 4 percent.
Variable annuities (VA) declined 30
percent in the fourth quarter of 2008 as
compared to the fourth quarter of 2007.
It's important to note that 2007 was
a record year for VA sales. Although
2008 year-end sales for VAs were
down 15 percent, they have rebounded
from larger deficits. In 2001, VA sales
dropped 19 percent yet saw doubledigit
growth within two years. In 2008,
total VA sales reached $155.6 billion.
Sales increased for all fixed
deferred annuity product types in
2008, led by a 135 percent increase in
market value adjusted products. Sales
of book value products, the largest
fixed annuity product type, grew
84 percent. Indexed annuity sales
increased 6 percent. Immediate fixed
annuity sales, while small in total,
increased 23 percent in 2008, fueled
by growing numbers of retirees seeking
guaranteed lifetime income.
After a promising start in 2008,
individual long-term care insurance
(LTCi) premium fell 23 percent in the
fourth quarter, ending 2008 down 7
percent. 2007 had marked a year of
growth in individual LTCi, but the 2008
market reversed that growth, recording
sales of about $600 million.
Sales of new policies declined 24
percent in the fourth quarter, resulting
in a drop of 9 percent for the year.
Total policy count reached almost
277,000 in 2008, comparable to levels
of the early 1990s.
Approximately 4.8 million individual
LTCi policies were in force at the end
of 2008, a 2 percent increase over
year-end 2007. Despite the economic
pressures facing Americans, individual
LTCI lapse rates continue to be low,
with only about 4 percent of policies
(lives) unaccounted for at year-end.