Indexed Products Rule Life Market in Q3

The shift toward index-based investing continues to reshape clients’ life insurance.

The number of individual indexed universal life policies sold increased 18% between the third quarter of 2022 and the third quarter of 2023, according to preliminary U.S. market survey data from LIMRA.

IUL policy sales increased 26% in the second quarter. IUL policies now account for 24% of all U.S. retail life sales premiums, or about $900 million in annualized premiums per quarter.

Annualized premiums from all kinds of U.S. individual life sales increased to $3.7 billion in the latest quarter, up 5% from the total for the year-earlier quarter.

What it means: First, index-based investing came for your clients’ mutual funds. Now, it’s also coming for their life insurance.

Indexed universal life insurance: An IUL policy is a form of permanent life insurance that builds cash value.

Clients can use IUL coverage in estate planning and retirement planning, as well as to provide death benefit protection.

An IUL policy owner gets a fixed rate of death benefit value growth. If selected investment market indexes perform well, the holder may get an extra amount added to the growth rate.