Life insurance sales increased 7% in the second quarter this year, compared to last year’s second quarter, which was the worst quarter in 70 years.

After several years of sagging, life insurance sales are showing new signs of life, propelled in part by a 23% increase in whole life policies sales in the second quarter.

Total individual life insurance new annualized premium rose 7% in the second quarter and 9% for the first six months of the year, according to LIMRA’s U.S. Individual Life Insurance Sales survey.

“Posting a nine percent increase, the results from the first six months of 2010 are encouraging for individual life insurance sales,” said Ashley Durham, senior analyst for LIMRA product research, in a statement.

“Things appear to be looking up,” Durham added, noting that 80% of the top 20 life insurance companies had increased sales and, more importantly, nearly half of all companies experienced double-digit growth during the first half of this year.

Whole life experienced its fourth consecutive quarter of double-digit growth, and it now represents a 31% of total market share the total sales–the highest share since 1998.  Year-to-date, whole life has increased 19% over the first half of 2009.

Universal life also continued to show gains, with premium up 11% in the second quarter as compared to second quarter 2009.  But again, universal life sales were down by almost 30% in the second quarter of 2009.  For the first six months of 2010, universal life sales are up 13%.

Death-benefit guarantee products also performed well, with universal life products with guarantees increasing 5% and now representing about half of universal life annualized premium.

Meanwhile, non-guaranteed universal life sales were up 26% over first half of 2009.  Most of this increase is attributed to indexed universal life sales, which jumped almost 40% for the quarter and 45% for the first six months of 2010. It is the growth of indexed universal life that has been the emerging trend in 2010 that is helping universal life sales regain momentum.

Variable universal life insurance (VUL) premium grew two% for the second quarter, resulting in a 6% rise for the first half of the year.  This time last year, VUL premium had tumbled 55%.

The one product whose premium didn’t grow this quarter was term life insurance.  New annualized premium for term dropped 11% for the quarter; down 7% year-to-date.  We have not seen term show a drop in sales of this magnitude since 2001.

Term policy sales fell even further, down 11% for the quarter and 8% in the first six months of 2010.  However, the drops were offset by improved universal life and whole life policy sales. Universal life policy count rose 22% for the quarter and 21% in the first half of 2010.  Whole life increased 8% in the second quarter and 4% year-to-date.  Overall policy count improved 1% for the quarter and for the first six months of 2010.