Life insurance sales fell last year despite a small uptick in consumer interest after the Sept. 11 attacks, according to figures released Tuesday by LIMRA International, a life insurance research group.
The number of policies sold dropped 5% compared with 2000, and the average face amount of policies fell 7% and total premiums paid declined 3%, said LIMRA analyst Elaine F. Tumicki.
Life insurance sales have declined in recent years as insurance agents sold fewer small policies and instead focused on selling larger policies to richer clients, industry analysts said.
That strategy caused problems last year because of a volatile stock market and estate tax repeal.
Once-popular policies including variable universal life and variable life, which combine insurance with an investment component, suffered sharp sales declines.
Meanwhile, Tumicki said, sales of survivorship life policies--typically used to pay estate taxes--fell by more than 25%.
Last year’s terrorist attacks did seem to prompt more insurance sales in the fourth quarter, Tumicki said.
The number of policies sold in October through December rose 5% from a year earlier, and the increase may continue into the first quarter this year.
Life insurance applications at U.S. insurers rose 8.5% in January compared with a year earlier, according to MIB Group Inc., an insurance information company.
But even with an increase, Tumicki cautioned, sales probably would remain below the levels of the late 1990s.
Although fourth-quarter sales were higher than a year ago, late 2000 was “particularly weak” for life insurance, Tumicki said.
Last year’s fourth-quarter sales were down 8% compared with the same period in 1999 and down 9% compared with the fourth quarter of 1998.