The insurance industry has experienced a sharp decline in the sale of so-called “unit-linked insurance plans”—until recently its hottest product—as the world financial crisis has made investors more averse to risk.

More and more buyers of insurance policies are reverting to traditional life plans, which are perceived to be more secure and are longer term in nature, officials of the Philippine Life Insurance Association (PLIA) said at a news briefing Tuesday.

PLIA officials said the association’s member-companies were redoubling marketing efforts to make up for the general slowdown in insurance policy sales.

“What we are seeing now is a slowdown in some areas” of the insurance business, said PLIA director Henry Joseph Herrera.

Herrera noted a decline in the demand for unit-linked plans, which had attracted strong market interest in the past, in part because they involved only single payments as opposed to periodic payments for traditional insurance products.

“Sales of single-pay, unit-linked [products] have weakened,” said Herrera, who is president and chief executive of the local unit of Canadian insurer Sunlife Financial.

First Guarantee Life Assurance Co. president Peter Coyiuto, a former PLIA head, said demand for “single-pay” products had declined sharply to the extent that these products were no longer on top of insurers’ sales figures.

“Before, over 50 percent of the industry’s new sales were ‘single-pay’,” he said. “Not anymore.”

Also known as “variable unit-linked” products, these investments were offered by many of the country’s biggest firms like Sunlife’s Sun Flexilink and Fexidollar instruments, Manulife’s Variable Universal Life product, and similar instruments offered by the local unit of Pru Life UK and AXA Philippines.

In a traditional life insurance plan, the premiums, cash values and death benefits are fixed, with the insurer determining where to invest the funds. In a variable life plan, premiums and death benefit are flexible and cash values depend on the investment performance of the funds chosen by the investor.

PLIA president Gregorio Mercado and Herrera noted that buyers were flocking back to traditional life insurance products because of the market volatility, which is affecting the yield of single-pay policies.

Officials of the group explained that during times of market volatility, investors were more inclined to buy life insurance policies where the risk is borne by the insurer, rather than single-pay policies where the bulk of both risk and reward accrue to the policyholder.

As part of the industry’s marketing effort, PLIA members reiterated the safety of insurance policies as a form of investment amid widespread concern about the stability of the industry. With editing by INQUIRER.net