Sales of universal life products in the United States tumbled in the second quarter of 2016 while whole life insurance products continue to gain ground.

Industry research group LIMRA has released its U.S. Retail Individual Life Insurance Sales Survey for Q2. It reveals that new annualized premium was flat during the period, although for the first six months of the year it was still up by 2% compared to the first half of 2015.

The total number of individual life insurance policies increased by 1%, which LIMRA notes is the seventh consecutive quarter of positive growth. Through the first half of 2016, the total number of policies sold increased by 2%.

Declining indexed universal life premiums

Declining indexed universal life (IUL) premiums pushed down universal life (UL) new annualized premium by 4% percent in the second quarter. Year-to-date, IUL accounted for 55% percent of total UL sales and 20% of all individual life premiums. Variable universal life (VUL) sales were also down, with new annualized premium falling by 12% in the quarter and by 12% year-to-date.

“A 7% decline in indexed universal life (IUL) stifled overall individual life insurance sales and as a result, sales in the second quarter were level with prior year.  This is just the second time IUL premium has dropped in a quarter over the last 10 years,” explains Ashley Durham, associate research director, LIMRA Insurance Research. “LIMRA attributes much of the decline to the recent illustration regulation, Actuarial Guideline 49, which went into effect in September 2015.”

Increases in whole life product sales

These declines were offset by increases in whole life (WL) product sales, which saw a 6% increase in new annualized premium during the second quarter and an 8% increase year-to-date. WL products made the largest contribution to total individual life premium growth in Q2, and LIMRA says that if the trend continues for the remainder of 2016 it would represent the eleventh consecutive growth year for WL.

Term life insurance also recorded a 2% increase in new premiums during the quarter, which represents the seventh consecutive quarter of growth for the product. During the first half of the year, term accounted for 21% of the US life insurance market.