Americans may finally be waking up to the reality of the importance of life insurance. LIMRA, an industry group, reports that for the second consecutive year, the number of individual life insurance policies sold has increased. The last time the country saw a two-year growth in policies sales was in 1980-1981.

The group also says every major life insurance product line saw growth in the fourth quarter of 2012. The last time all product lines grew in the same quarter was in 2006.

Universal life insurance leads premium growth

LIMRA tracks both the number of policies sold as well as the amount of premiums collected by life insurance companies. In terms of premiums, universal life insurance had a 40 percent share of the market in 2012.

In addition, universal life products saw the greatest growth in the fourth quarter of the year. During those months, insurers saw the amount of universal life premiums they collected rise by 20 percent. That was despite an eight percent decrease in the number of universal life insurance policies sold during the fourth quarter.

Within the universal life insurance market, indexed policies jumped 42 percent in the fourth quarter and 36 percent overall for the year. Lifetime guaranteed universal also had a strong fourth quarter, rising 27 percent. However, the product saw only a one percent increase for all of 2012.

Policy count up for second straight year

Overall, the number of policies sold in 2012 inched up by one percent. Although the increase was small, it marked the first time since 1981 that the number of policies sold had increased for two consecutive years.

In addition, the increase may indicate consumers are getting the message that life insurance rates are affordable and coverage is valuable. Back in 2010, LIMRA sounded the alarm saying individual life insurance ownership had reached a 50 year low. At that time, 30 percent of households reportedly had no life insurance coverage.

The findings were part of the organization's Trends in Life Insurance Ownership study which is conducted every six years. While LIMRA isn't expected to conduct its next review of ownership trends for another three years, the increase in policies sold in 2010 and 2011 may mean the next report will find the number of uninsured households is dropping.

Although universal life had some of the greatest increases in sales last year, households have other options including whole life and term life. Both whole life and universal life are forms of permanent life insurance that gain cash value. Meanwhile, term life is a basic policy that can be more affordable for those with a limited budget.