The deep recession of 2008-09, which significantly hurt sales of both variable life and universal life products, also has wrought a positive change in the life insurance industry: People have rediscovered the value of whole life policies.
And while even term life sales have fallen slightly, according to reports by Limra, the industry's marketing and research association, whole life grew in 2008 and through the first three quarters of 2009. Limra noted that annualized premiums for whole life during last year's third quarter rose 12%.
Historically, product-line sales have been cyclical. The question is whether the extreme economic conditions of the past 18 months will have a longer-lasting effect than a normal economic downturn.
"We are seeing that the recession is continuing to have an impact," said Deanna Mulligan, executive vice president at the Guardian Life Insurance Company of America, headquartered in New York. "While the recession may be over, the impact on people's investment portfolios and their financial plans is not over. People are still working to repair the damage done and will be for some time. So this is a great time for whole life to be part of that repair of people's financial lives."
Damon Bates, vice president of life insurance marketing at MassMutual, is not so sure.
"While whole life insurance sales are up now, and MassMutual remains committed to the product, we realize public memory can be short," he said. "The VUL [variable universal life] marketplace is down over 50% through the third quarter, according to Limra. There will be a time in the not-too-distant future when the market comes back, and VUL will be popular again. That said, we have no delusions that the economic conditions we're seeing now will permanently make whole life that much more attractive forever."
Richard Weber, an industry veteran of 42 years and …
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