IUL sales strong but face a potential rough patch

This was despite the product’s connection with equities, which had a challenging year. The marketing message of not losing principal while gaining on the upside was a winner, Moore said.

by Steven A. Morelli

Sales of indexed universal life products remain strong, but next year might feature a speed bump mid-year, according to industry analysts.

Although the fourth quarter is not expected to be a record-breaker on its own, it caps a banner year. Sheryl Moore, CEO of Moore Market Intelligence, projected that it will supersede last year’s blazing performance.

“I am projecting total 2022 IUL sales to be more than $2.7 billion in target,” Moore said. “This will be significantly greater than the last record of $2.4 billion that was achieved in 2021.”

“I hate saying this motto with index life, but zero is your hero. When the markets are going down, the worst-case scenario is that you earn 0%,” Moore said. “And the reason I hate that is because you still pay for the insurance charges that come out of the policy. So, you’re really not getting zero. You’re having a negative adjustment to your cash value to pay for insurance charges.”

A bigger issue in Moore’s estimation is IUL illustrations, which regulators are likely to adjust this year after the past few years of discussing the issue. Moore and others have said that hybrid, proprietary and unproven indexes are confusing and misleading consumers, something that regulators are expected to act on.

The National Association of Insurance Commissioners have been looking at updating Actuarial Guideline 49, which was enacted in 2015 to rein in IUL illustrations.