U.S. Life Insurance Market Growth Outlook: Trends and Insights
Amid ongoing economic challenges, the U.S. life insurance and annuity markets are projected to experience robust growth through 2026, according to LIMRA research. During a LinkedIn Live discussion, Bryan Hodgens, Senior Vice President of LIMRA Research, and Sean Grindall, LIMRA’s Chief Member Relations and Solutions Officer, offered insights on future sales trends, emphasizing the industry's potential despite regulatory compliance requirements.
Record Highs in Life Insurance Premiums
LIMRA anticipates a continued upward trajectory for life insurance premiums, achieving record highs in three of the past four years. Bryan Hodgens noted the potential for setting another record by 2025, yet highlighted the existing coverage gap affecting approximately 100 million Americans lacking adequate life insurance. This gap presents both a challenge and an opportunity within the industry.
Sustained Momentum in Annuity Sales
In the annuity market, Hodgens projects sales to surpass $450 billion by 2025, doubling figures from four years prior. This trend marks the fourth consecutive year of record-setting growth for annuities, underlined by carrier innovation and strategic risk management approaches.
Economic Conditions Affect Insurance Market
The current economic landscape presents both opportunities and challenges. Elevated interest rates and a robust equity market support growth in indexed and variable universal life policies. However, inflation and unemployment are key concerns influencing middle-market consumer behavior. Sean Grindall explained that more than half of Americans express significant economic anxiety, affecting insurance purchasing decisions.
Specific Trends in Life Insurance Categories
LIMRA's forecasts, grounded in factors like household income, inflation, and consumer demand, indicate varied growth by insurance type. Term life insurance could grow 0% to 4% due to economic activity, while whole life insurance might see 1% to 5% growth, driven by short-pay sales. Conversely, fixed universal life premiums may decline 3% to 7%, with indexed universal life growing 8% to 12% amid increasing competition. Variable universal life is expected to grow 1% to 7%, tempered by market volatility impacting private placements.
These comprehensive projections, incorporating multiple economic indicators, provide an essential outlook on how the industry can strategically navigate through opportunities and risks in regulatory compliance and competitive landscapes.