Last month we talked about the sales growth in the voluntary market in 2008. This month we're going to look at the product trends detailed in the 2008 U.S. Worksite Sales Report.
By line of business, short-term disability led the field with more than $800 million in sales. Term life came in second with almost $778 million. Disability (VSTD plus VLTD) and life insurance (term plus UL/WL) were almost identical in overall product market share (22 percent each).
Overall, voluntary life sales were up for 2008, the first time we have seen an increase in several years. The total increase for the year was 21 percent compared to declines of minus 6 percent in 2007 and minus 3 percent in 2006. Total life sales were $1.151 billion. Term life sales accounted for about two-thirds of the total life sales and for most of the increase. Term life sales were up 30 percent, while universal life and whole life sales were up a little more than 5 percent.
Total disability sales were $1.151 billion and were up only slightly from 2007 (0.8 percent). Short-term disability sales accounted for 70 percent of the voluntary disability sales but the increase in disability was due to a 6 percent increase in voluntary LTD sales.
We've been watching as the mix of sales between group and individual platform voluntary sales has changed. In 2008, group sales increased its mix to 48 percent of total sales, up from 46 percent in 2007. Group voluntary sales were $2.5 billion while individual voluntary sales were $2.7 billion. The growth rate for group products in 2008 was significantly higher than for individual. Group sales grew by almost 9 percent, while individual sales were down slightly by 0.3 percent.
While 2008 looked fairly good, what can we expect for 2009? Eastbridge continues to be positive as do executives in the market. In fact, a recent Eastbridge survey showed that many of those in the market expect the industry to achieve around a 5 percent increase for 2009. Looking at the state of the market and economy today, we expect that the growth rate in the short term is likely to be in the 3 percent to 5 percent range. The recession has impacted the employee counts (especially new hires), and this will likely impact voluntary sales. But we believe that more employers will be looking to add voluntary benefits to keep their benefit packages competitive and to give employees the tools they need to deal with the costs of providing health care and financial security for their families.
Gil Lowerre can be reached at (860) 676-9633 or glowerre@eastbridge.com.
Bonnie Brazzell can be reached at (803) 738-1236 or bbrazzell@eastbridge.com.
