South of the border, term insurance and variable insurance are declining in favour of permanent products with guarantees.

In a report published on Feb. 23, credit analyst firm and insurance specialist A.M. Best reveals that annual sales of life insurance premium in the United States fell 3% in the third quarter of 2008.

A.M. Best expects this trend to continue at least until mid-2009. Insurers in the United States have had to adapt to remain profitable. For one, they reconfigured term insurance products. Risk management models used in the industry were sometimes too optimistic, the A.M. Best report explains. The prices of term products have also been revised, often upward. Life reinsurance prices in the U.S. are also on the rise.

While Canadians seem to be flocking to term insurance, Americans are snapping up whole life products. A.M. Best calls the shift "the flight to quality". The main suppliers of whole life are highly capitalized companies and mutuals with solid credit ratings, the report explains.

Americans are steering clear of products without guarantees, especially variable life insurance, whose annual premiums sales have been dragging. In the United States, variable life insurance is among the most expensive forms of whole life because it is partly channelled into a separate account with a variable return. Considered a security, it is regulated as such and must be sold with a prospectus. On a smaller scale, sales of universal life and term insurance have also waned in the United States, in terms of annual premiums.