UK Protection Insurance 2018: Term and Whole of Life

UK Protection Insurance 2018: Term and Whole of Life


The UK life protection insurance market for regular individual premiums grew in 2017, driven by growth of the term assurance market despite the whole-of-life market declining. Term market growth was primarily due to increased sales of non-mortgage term assurance policies by independent financial advisors, although sales in the direct channel are also increasing, reflecting demand to purchase life insurance online. Underwritten whole-of-life policies continue to be sold by independent advisors, while guaranteed acceptance over-50s products are sold direct without advice. Inheritance tax liability is seen as an opportunity to sell whole-of-life cover, with some insurers launching targeted advisor-sold policies to capitalize upon this.

This report discusses the term assurance and whole-of-life insurance markets, looking at market size with regards to changes in contracts and premiums. The scope of this report covers the market for individual regular premiums only, concentrating on the main market for all types of consumers seeking their own cover. It highlights how products are distributed, and the main market players and their propositions. It provides five-year forecasts of market size in premiums to 2022, and discusses how the market, distribution, and products offered are likely to change in future.


  • Total protection premiums reached £728.7m in 2017, exhibiting growth of 8.4% for the year. Term premiums reached £540.8m following 13.5% year-on-year growth to 2017, whereas whole-of-life premiums shrank by 1.8% to £96.3m.
  • The protection market is dominated by a few key players. Legal & General holds the largest share of the term market (32.6%), whereas SunLife holds the largest proportion of the whole-of-life market (39.1%).
Reasons to buy
  • Understand the future of life insurance products and the services that are vital to implement. This includes engaging in health and wellbeing, personalizing policies, providing customers with rewards and benefits, and improving underwriting and claims processes.

1.1. Market summary
1.2. Key findings
1.3. Critical success factors
2.1. Introduction
2.2. The protection market saw growth in 2017
2.2.1. The UK protection market grew in 2017, following three years of stagnation since the RDR
2.2.2. Term products dominate the protection market
2.3. The term market dictates the performance of the total protection market
2.3.1. The term market recorded 13.5% growth in new business premiums in 2017
2.3.2. Term assurance rates are falling due to competition and simplified distribution
2.3.3. 14.2% of non-mortgage related contracts may have been purchased to protect a mortgage
2.3.4. Growth in mortgage lending is an opportunity for term policy providers
2.3.5. The opportunity is ripe for targeting first-time buyers with term assurance
2.3.6. Automation is making selling protection alongside a mortgage easier
2.4. Whole-of-life is a market of two halves
2.4.1. The whole-of-life market continued to decline in 2017 but at a slower rate
2.4.2. The guaranteed acceptance market has been propped up by rate increases
2.4.3. Fewer underwritten policies are being sold with critical illness insurance as a rider
3.1. Growth of the total protection market is mostly down to IFAs
3.1.1. Growth of the protection market is attributed to the independent advice channel
3.1.2. The independent advice channel accounted for nearly half of new contracts in 2017
3.1.3. 12.0% of mortgage-related term assurance policies are sold via banks
3.2. Term products are still dominated by IFAs
3.2.1. The independent and non-advised channel grew in 2017 while the restricted channel declined
3.2.2. The independent advice channel grew significantly for term assurance in 2017
3.3. Distribution of whole-of-life products is as divided as ever
3.3.1. The majority of guaranteed acceptance products are sold without advice
3.3.2. Underwritten whole-of-life policies are complex and so are distributed through IFAs
3.3.3. Increasing inheritance tax liability is creating an opportunity for the whole-of-life market
3.3.4. The government has announced a review of inheritance tax in order to reduce complexity
4.1. Competitive advantage will be gained through innovation
4.1.1. Competition in the life insurance market is focused on innovation and distribution
4.1.2. Insurers fear the GDPR being a barrier to innovation and product marketing
4.2. The life insurance market is dominated by a few key players
4.2.1. Legal & General dominates the individual term assurance market
4.2.2. SunLife holds the largest share of the whole-of-life market
4.3. Legal & General attracts customers with retail gift cards
4.3.1. Legal & General has a calculator tool for customers purchasing directly online
4.3.2. Legal & General offers a standard term assurance policy and a mortgage-linked policy
4.3.3. Legal & General’s over-50s plan has an option to add an extra £300 towards funeral costs
4.3.4. Legal & General offers retail gift cards for purchasing life insurance
4.4. Aviva has additional life cover that is only sold through advisors
4.4.1. Aviva allows customers to purchase standard policies directly online
4.4.2. Aviva’s standard term assurance has an optional separation benefit
4.4.3. Life insurance+ provides enhanced cover options for those adding on critical illness
4.4.4. Aviva doubles the payout of its over-50s policy if death is caused by an accident a year after policy purchase
4.4.5. Aviva recently launched a whole-of-life+ policy for high-value clients at risk of inheritance tax
4.4.6. Aviva has purchased Irish insurer Friends First
4.5. SunLife is marketed towards the over-50s
4.5.1. SunLife offers term family life insurance and an over-50s policy
4.5.2. SunLife term assurance is underwritten by Royal London
4.5.3. SunLife provides funeral planning and calculator tools alongside its over-50s policy
4.6. Vitality rewards healthy customers with discounts
4.6.1. Vitality uses rewards and discounts to encourage healthy behavior
4.6.2. Vitality uses marketing and partnerships to increase engagement with health and its brand
5.1. The life insurance market is forecast to exhibit slight growth
5.1.1. The term market will grow, while the whole-of-life market will contract by 2022
5.1.2. The term assurance market will grow due to innovations in products and distribution
5.1.3. The whole-of-life market is forecast to decline over the next five years
5.2. Life insurers seek to better understand their customers through data
5.2.1. Insurance will become personalized through the internet of things and focused on prevention
5.2.2. How and what data life insurers collect about their customers will evolve
5.2.3. Selfie underwriting is only being used for quick quotes
5.2.4. Genomic profiling could be used to assess risk in the future
5.2.5. The definition of customer risk is changing
5.3. Life insurers will engage in health and wellness
5.3.1. Life insurers will take an active role in preventing illness and injury
5.3.2. Data must be converted into meaningful insight for individuals
5.3.3. Life insurance providers are launching their own wellbeing apps
5.3.4. Providers are launching digital healthcare and virtual GP services
5.3.5. The range of added-value services will expand
5.3.6. Rewards and benefits are key to making protection seem a valuable purchase
5.3.7. Combined health and life insurance plans are being launched in India
5.4. Underwriting is becoming personalized
5.4.1. Insurers are refining traditional purchasing processes
5.4.2. Flexible policies will give customers more control of cover levels, duration, and affordability
5.4.3. Artificially intelligent robo-advisors have a future role in recommending cover
5.4.4. Cover could change in real-time if customers are monitored continuously
5.4.5. Life insurers are developing specialist policies for groups of consumers
5.5. Claims services must use technology to increase efficiency
5.5.1. Claims efficiency is important, with some already being paid within one day
5.5.2. Insurers should help customers plan for end of life
6.1. Abbreviations and acronyms
6.2. Definitions
6.3. Forecasting methodology
6.4. Bibliography
6.5. Further reading
List of Figures
Figure 1: The UK protection market grew by 9.0% in contracts and 8.4% in premiums year-on-year to 2017
Figure 2: Non-mortgage related term assurance products dominate the protection insurance market
Figure 3: Only mortgage term life with critical illness declined in contracts in 2017
Figure 4: Mortgage lending is forecast to continue growing, but at a slower rate over the next few years
Figure 5: First-time buyers have overtaken home movers in the number of loans made to home owners
Figure 6: Guaranteed acceptance policies make up the majority of whole-of-life market contracts
Figure 7: Advisors are key to the distribution of protection products
Figure 8: Banks left the market following the RDR, with guaranteed acceptance products being the worst hit
Figure 9: The non-advised channel is also growing, highlighting that consumers are willing buy term assurance independently
Figure 10: Whole-of-life underwritten policies are sold through IFAs, but guaranteed acceptance cover is sold direct
Figure 11: Legal & General dominates the term market, while SunLife leads the way in whole-of-life
Figure 12: The life insurance market is forecast to grow by 2.4% from 2017 to 2022

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