The new year is going to be big for index universal life. Since the decline in the equities markets at the close of 2008, sales of indexed insurance products have been on the rise.
Index life insurance sales are up over third quarter 2008 and index annuity sales set record sales in 2009. But sales of equities products such as variable universal life are down dramatically.
Indicators suggest that Americans' needs for safety of principal and upside potential will make IUL the beneficiary of this shift in cash value life insurance sales for the upcoming year.
Another big story for IUL in 2010 is legitimacy. Several big insurance companies are looking at IUL as a viable product for their cash value life insurance portfolios. Although unfamiliarity in the market could cause delays with product implementation, expect to see a number of new insurance companies delving into the IUL line before the close of 2010.
Currently, 33 companies are offering this once-niche product. If new, large, highly-rated companies also jump in, this will only increase the market's legitimacy.
The next big story for the upcoming year will be a shake-up in sales rankings. One top insurance company has practically dominated the top spot in the IUL market since the turn of the century. However, recent commission reductions and terminated agent contracts have given way for other carriers to take over the top spot. Many are projecting that 2010 will be the year the top IUL carrier gets dethroned.
In addition, recent product development due to 2001 Commissioners Standard Ordinary changes has paved the way for lesser-producing IUL companies to move up in rankings.
Now, the not-so-good news. A big story that continues to get bigger in the IUL market is illustrated rates.
These fixed insurance products have no standardization for the methodologies used to illustrate current cash values. This translates to consumer misunderstanding, agent confusion, and a general lack of understanding about IUL as a whole.