Whole life policies drive growth in life insurance

By Maryalene LaPonsie on June 7th, 2012

Life insurance policies saw growth for the first quarter of 2012, in part because of strong whole life sales. LIMRA, an industry group, reports total life insurance premiums collected by insurers grew 3 percent during the quarter as compared to the previous year. Meanwhile, the policy count increased 5 percent during that same period.

Whole life sales showed the greatest increase -- premiums collected from these plans rose 10 percent. The number of whole life policies issued by insurers rose by 6 percent. Premiums for term life, often considered the most affordable life insurance option, remained relatively flat with only a 1 percent increase. However, the term life segment did see a 4 percent increase in its policy count.

Consumers appear to have mixed feelings about universal life insurance, with one product in this category recording double-digit growth while another experienced a double-digit decline. Lifetime-guarantee products have seen their popularity erode steadily as consumers continue to be wary of current investment conditions. In the first quarter of 2012, insurers collected 12 percent less in premiums for these lifetime-guarantee universal life insurance as compared to the prior year.

However, not all universal life products fared so poorly. Premium collections for indexed universal life insurance increased 22 percent, while the policy count for these products rose 41 percent.

Selecting the right life insurance policy

While consumer trends in life insurance appear to favor whole life and indexed universal life plans, individuals should carefully consider their situation and family needs before purchasing a policy.

Term life features affordable life insurance rates and provides basic coverage for a specific period of time. Whole life and universal life products may be more expensive, but they also build cash value that can be borrowed against in the future for any reason. In addition, permanent life insurance offers guaranteed coverage that cannot be canceled, even in the event of illness, so long as premiums are paid.

To select the right policy, individuals should evaluate the level of coverage needed and the premium amount they can comfortably afford as well as whether they anticipate any major expenses in the future. The cash value from permanent life insurance can be used to pay for college tuition, home upgrades or other needs. Those considering universal life insurance should also carefully review any potential investment risk. Some of these products are tied to market performance and could lose value in an economic downturn.

Maryalene LaPonsie
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.

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