The U.S. individual life insurance market is poised for continued growth in 2025, building upon record-setting premiums in previous years. Financial advisors must stay informed about product trends and economic factors to effectively guide clients.
Market Overview
In 2024, life insurance premiums reached a record $15.9 billion, with projections indicating further growth in 2025. This surge is attributed to heightened consumer awareness post-pandemic and favorable economic conditions.
Product-Specific Trends
Whole Life Insurance (WL): Rising interest rates have recently impacted WL sales, shifting preference toward longer premium payment periods with lower annual premiums. As the yield curve normalizes, WL sales are expected to grow by 1% to 5% in 2025.
Term Life Insurance: After a 5% decline in 2022, term life sales rebounded in 2023, driven by digital platform expansions and competitive pricing. Premium growth is projected to remain stable through 2024, with anticipated growth of 1% to 5% in 2025.
Variable Universal Life (VUL): Strong equity markets have enhanced VUL’s appeal, leading to a predicted 12% to 16% premium growth in 2024. Continued market strength could result in a 5% to 9% growth in 2025.
Indexed Universal Life (IUL): The IUL market has bifurcated into traditional carriers experiencing decreased sales and those focusing on simplified, lower face amount products with significant success. Premiums are forecasted to increase by 3% to 7% in 2024 and 2% to 6% in 2025.
Fixed Universal Life (Fixed UL): After years of decline due to falling interest rates, fixed UL sales began rebounding in late 2023. Sales are expected to grow by 8% to 12% through 2024 and moderate to 3% to 7% in 2025 as interest rates decline.
Economic Influences
Advisors should monitor key economic indicators impacting the life insurance market:
Equity Markets: Expected increases in 2025 may particularly benefit VUL products.
Interest Rates: Projected declines could alleviate pressure on IUL and WL sales.
Inflation and Unemployment: Lower rates are favorable for term and whole life products.
Income Levels: Anticipated to rise at or slightly above inflation, potentially boosting life insurance affordability.
Strategic Considerations for Advisors
To navigate the evolving landscape:
Stay Informed: Keep abreast of economic trends and product developments to provide clients with timely, relevant advice.
Personalize Recommendations: Align product suggestions with clients’ financial goals, risk tolerance, and coverage needs.
Embrace Digital Tools: Utilize digital platforms to enhance client engagement and streamline the insurance selection process.
By understanding these dynamics, financial advisors can better serve clients and capitalize on opportunities in the evolving life insurance market.
