4 Stocks to Add to Your Portfolio From a Prospering Life Insurance Industry
In the December 2025 FOMC meeting, the Federal Reserve slashed the interest rate by 25 basis points to 3.5%-3.75%. The Fed also hinted at one to two cuts this year. In such a scenario, life insurers will likely face challenges as they invest a large portion of their premiums to meet contractually guaranteed obligations of policyholders. Also, with accelerated digitalization, expenses are likely to increase. Prudently pricing the products and balancing customers' preferences and claim costs are a challenge.
About the Industry
The Zacks Life Insurance industry includes companies offering life insurance, annuities, and retirement products such as term and whole life policies, health coverage, Medicare supplements, long-term care, and wealth and asset management services. Per Research and Markets, the global life insurance market is expected to grow to $7.13 trillion in 2026 and reach $11 trillion in 2032, at a CAGR of 7.5%, given the increase in the aging population and increased awareness of the need for financial security. While emerging markets could see faster growth due to low insurance penetration, developed markets could witness slower growth due to market maturity, as per Deloitte. The industry has also been witnessing the accelerated adoption of technology. However, rising mortality or loss cost trends may impact the profitability of insurers.
3 Trends Shaping the Future of the Life Insurance Industry
Interest Rate Lowered: The Federal Reserve slashed the interest rate three times in 2025 and hinted at one to two more cuts in 2026, given a soft job market and muted economic growth. Life insurers are direct beneficiaries of improved rates as they invest premiums to meet the contractually guaranteed obligations of policyholders. Thus, muted rates will likely weigh on investment return. Nonetheless, in times of persistently low interest rates, life insurers direct their funds into alternative investments like private equity, hedge funds and real estate. With an improving equity market, lower interest rates could relieve pressure on indexed universal life (IUL) and whole life sales, given low unemployment as per the LIMRA report. LIMRA expects indexed universal life (IUL) sales to grow at a double-digit pace in 2026, driven by new product launches and broader distribution. In contrast, variable universal life (VUL) sales are projected to slow down due to anticipated equity market volatility, while term life sales are likely to remain relatively stable with limited growth.
Product Redesigning: The industry is increasingly combining insurance, wealth management, and healthcare services (including retirement income products, annuities, investment-linked insurance and health and wellness riders) to stay relevant, per a McKinsey and Company report. Life insurers continue to roll out investment products that provide bundled covers of guaranteed retirement income, life and healthcare to cater to customers preferring policies with “living” benefits more than those with death benefits. Increased awareness about having coverage continues to support the life insurance business. A compelling product portfolio with prudent pricing will thus aid sales of life insurers. Per a report published in ReporterLinker, global life insurance gross written premium is expected to be $2.5 trillion by 2026. Per Statista’s report, gross written premium is expected to show an annual growth rate (CAGR 2025-2029) of 3.54%. According to a Deloitte report, global life insurance premiums may decline amid U.S. policy uncertainty, while annuities should continue growing. Advanced markets will likely see limited growth, whereas emerging markets are expected to expand faster due to low insurance penetration and rising middle-income populations.
Increased Adoption of Technology: Per Statista, the United States is experiencing a shift toward digital platforms and online sales in life insurance. Carriers have started selling policies online that appeal to the tech-savvy population. These insurers are offering customized coverages leveraging artificial intelligence and machine learning. At the same time, the use of real-time data makes premium calculation easier and reduces risk. Increased automation is expected to drive premium growth and boost efficiency. Moreover, accelerated digitization, as evident from the increased adoption of generative AI, cognitive intelligence and blockchain, should help life insurers curb operational costs and aid margin expansion. Insurers are investing heavily in technological advancements to ensure efficiency and smooth functioning. At the same time, players must shield themselves from falling prey to cyber threats.
Zacks Industry Rank Indicates Solid Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates strong prospects for the near term.
The Zacks Life Insurance industry, within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #88, which places it in the top 36% of the 255 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate.
Before we present a few life insurance stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry vs. Sector & S&P 500
The Life Insurance industry has underperformed the Zacks S&P 500 composite and the Finance sector year to date. The stocks in this industry have collectively gained 6% compared with the Finance sector’s increase of 14.1% and the Zacks S&P 500 composite’s increase of 24.2% in the said time frame.
Year-to-Date Price Performance
Life Insurance Industry's Current Valuation
On the basis of trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 1.81X compared with the S&P 500’s 7.96X and the sector’s 4.14X.
Over the past five years, the industry has traded as high as 2.14X, as low as 1.05X, and at the median of 1.59X.
Price-to-Book (P/B) Ratio (TTM)
Price-to-Book (P/B) Ratio (TTM)
4 Life Insurance Stocks to Buy
Here, we present four Zacks Rank #2 (Buy) stocks from the industry.
AIA: Based in Central, Hong Kong, AIA Group Limited, together with its subsidiaries, provides life insurance-based financial services in Hong Kong. This leading pan Asian life insurer benefits from its solid agent force, exclusive bancassurance tie-up, strong free surplus generation and a shareholder-friendly capital return program.
The Zacks Consensus Estimate for AAGIY’s 2026 and 2027 earnings indicates a year-over-year increase of 28.3% and 13.8%, respectively.
Price and Consensus: AAGIY
Manulife Financial: Headquartered in Toronto, Canada, MFC is one of the three dominant life insurers within its domestic market and possesses rapidly growing operations in the United States and several Asian countries. A strong Asia business, expanding wealth and asset management business, investments to ramp up digital capabilities and a solid capital position position this life insurer well for growth. MFC estimates core EPS growth between 10% and 12% over the medium term.
The Zacks Consensus Estimate for Manulife’s 2026 and 2027 earnings indicates a year-over-year increase of 9% and 8.5%, respectively. The consensus estimates for 2026 and 2027 earnings have moved 1.2% and 1.1% north, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 3.63%.
Price and Consensus: MFC
Sun Life Financial: Toronto-based Sun Life is the third largest insurer in Canada, providing protection and wealth management products and services to individual and group customers worldwide. Its focus on Asia operations and its efforts to boost the Global Asset Management Business and scale-up of U.S. operations bode well. Sun Life aims for underlying bottom-line growth of 8-10% over the medium term.
The Zacks Consensus Estimate for SLF’s 2026 and 2027 earnings indicates a year-over-year increase of 7.5% and 11.1%, respectively. The consensus estimates for 2026 and 2027 earnings have moved 0.7% and 0.9% north, respectively, in the past 30 days. SLF delivered a four-quarter average earnings surprise of 3.1%.
Price and Consensus: SLF
Reinsurance Group of America: Timberlake, MO-based Reinsurance Group of America is a leading global provider of traditional life and health reinsurance and financial solutions with operations in the United States, Latin America, Canada, Europe, the Middle East, Africa, Asia and Australia. Reinsurance Group is set to benefit from better pricing and expanding business in the pension risk transfer market. Solid in-force business ensures predictable long-term earnings. Product-line expansion contributes to risk diversification.
The Zacks Consensus Estimate for RGA’s 2026 and 2027 earnings indicates a year-over-year increase of 15.8% and 7.7%, respectively. The consensus estimates for 2026 and 2027 earnings have moved 2.1% and 1.3% north, respectively, in the past 30 days. RGA delivered a four-quarter average earnings surprise of 8.22%.
Price and Consensus: RGA
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AIA (AAGIY): Free Stock Analysis Report
Manulife Financial Corp (MFC): Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA): Free Stock Analysis Report
Sun Life Financial Inc. (SLF): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
