They call it the “new annualized premium,” and according to the Life Insurance and Market Research Association, premiums climbed 5 percent in the last quarter of 2016.
That increase resulted in a 3 percent increase for the whole of last year, and the data comes from LIMRA’s Fourth Quarter Retail Life Insurance Sales Survey.
Ashley Durham, an associate research director at LIMRA Insurance Research, says the U.S. life insurance market has benefitted from steady growth since the last economic downturn and adds that, despite those premium increases, overall premium sales have increased “by more than 20 percent.”
According to the survey, whole life insurance premium ramped up 11 percent in the fourth quarter, and seven of the top 10 whole life insurance providers reported growth numbers for the fourth quarter. The results marked the 11th consecutive year of growth for whole life premium policies. That hasn’t happened since LIMRA began reporting on what the call “product-level data” back in 1983.
The data also revealed that whole life now represents 36 percent of the total life market for 2016.
LIMRA says that term life insurance sales benefitted as well.
Following eight consecutive quarters of growth, LIMRA says term life insurance new annualized premiums fell 1 percent in the fourth quarter, but term premium closed out 2016 1 percent higher than the previous year. Term market share was 21 percent in 2016.
What is the difference between term and whole life insurance?
Term Life insurance is meant to cover needs for a defined period of time which can run from 10 to 30 years. It’s typically purchased by people in the 21-65-year-old age brackets, and term life is commonly used to address the replacement of income from a family breadwinner or caregiver when that income is lost.
Whole Life – and Lifetime Universal Life – is designed to give you a constant amount of coverage, at a known price for the rest of your life. Whole Life is most often used to pay estate taxes, build cash value or to build an estate.
Final Expense Whole Life, on the other hand, is popular coverage as it requires no medical exam, is sold in small amounts up to $25,000 and it’s designed to pay for burial and other final expenses after death.