Variable Universal Life Sales Roar Higher

Sales Trends

Here's what happened to new annualized premiums from the sale of certain types of policies between the second quarter of 2020 and the latest quarter:

• Variable Universal Life: Up 69%
• Whole Life: Up 25%
• Indexed Universal Life: Up 20%
• Term Life: Up 8%
• Fixed Universal Life: Up 7%

The Survey

LIMRA is a Windsor, Connecticut-based financial services research organization. It conducts the quarterly life sales surveys mainly to serve needs of members, who get detailed results.

The survey summaries offered to the public indicate how much sales have changed, year-over-year. The summaries do not give the actual sales figures.

VUL Buyers' Motives

Consumers can use VUL policies in two ways.

• Buyers who want to maximize death benefit protection can choose policies designed to minimize the premiums and maximize the death benefits.
• Buyers who want to use the policies to save for retirement, pay for college for their children or support other long-term goals typically buy policies that maximize the premiums, minimize the death benefits and maximize the build up of policy cash value.

Sales of protection-focused VUL policies grew 27% in the second quarter, year-over-year, and sales of accumulation-focused VUL policies climbed 144%, according to LIMRA.

The boom in sales of protection-focused VUL policies may be due partly to a life insurance definition update included in the Consolidated Appropriations Act, 2021.

The provision lowered the minimum interest rate a life insurer can build into an arrangement that the Internal Revenue Services will treat as a life insurance policy. The change has made it easier for accumulation-focused life insurance users to maximize policy cash value.

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