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Term Assurance - UK - June 2017

“Sales of term assurance rose in 2016, as the market is starting to see more innovation across new product types, distribution channels and underwriting. However, life insurance continues to be low down in consumers’ list of priorities, making it hard for insurers to engage with potential customers.”

Jessica Galletley, Financial Services Analyst

This report looks at the following areas:

  • Growth of non-advised sales could affect cover levels
  • Cost-saving factor is key when deciding to share data
  • Younger consumers more likely to be interested in healthy living benefits

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Premiums rise by 2% in 2016
              • Figure 1: New individual term assurance sales and average annual premium, 2012-16
            • Term assurance market forecast to grow
              • Figure 2: Forecast of new individual term assurance contracts – Fan chart, 2012-22
              • Figure 3: Forecast of new term assurance premiums – Fan chart, 2012-22
            • Non-advised protection sales grow
              • Figure 4: Share of new term assurance business (contracts), by channel, 2016
            • Over half have less than £5,000 in savings and investments
              • Companies and brands
                • Legal & General remains the largest life insurer, despite M&A activity
                  • Figure 5: Top five providers of individual term assurance, by sales volumes, 2015 and 2016
                • Investing in technology is a strategic priority
                  • Prevention rather than payouts
                    • Life assurance advertising spend grows by 5%
                      • Figure 6: Total above-the-line, online display and direct mail advertising expenditure on life protection (including term assurance), 2012/13-2016/17
                    • The consumer
                      • Less than a third hold life insurance
                        • Figure 7: Insurance product ownership, April 2017
                      • Term assurance is the most commonly held type of policy
                        • Figure 8: Type of life insurance product(s) owned, April 2017
                      • Low levels of cross-selling in the life insurance market
                        • Figure 9: Other products held with life insurance provider, April 2017
                      • Price comparison websites used as a benchmark for costs
                        • Figure 10: Sources when looking for information on a new or existing life insurance policy, April 2017
                      • Cash benefits attract most interest
                        • Figure 11: Interest in additional life insurance benefits, April 2017
                      • Short-term goals take financial priority over life insurance
                        • Figure 12: Current financial priorities, April 2017
                      • Only a quarter would be willing to share their data
                        • Figure 13: Interest in data sharing to influence the cost of life insurance premiums, April 2017
                      • What we think
                      • Issues and Insights

                        • Growth of non-advised sales could affect cover levels
                          • The facts
                            • The implications
                              • Cost-saving factor is key when deciding to share data
                                • The facts
                                  • The implications
                                    • Younger consumers more likely to be interested in healthy living benefits
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Premiums rise by 2% in 2016
                                            • Term assurance market forecast to grow
                                              • Non-advised protection sales grow
                                                • Over half have less than £5,000 in savings and investments
                                                • Market Size and Forecast

                                                  • Market returns to growth
                                                    • Figure 14: New individual term assurance sales and average annual premium, 2012-16
                                                  • Number of in-force policies falls for the fourth time in 2015
                                                    • Figure 15: Number of individual term and whole-of-life assurance policies in force, 2008-15
                                                  • Market forecast
                                                    • Term assurance market forecast to grow
                                                      • Figure 16: Forecast of new individual term assurance contracts – Fan chart, 2012-22
                                                      • Figure 17: Forecast of new individual term assurance contracts – Fan chart, 2012-22
                                                      • Figure 18: Forecast of new term assurance premiums – Fan chart, 2012-22
                                                      • Figure 19: Forecast of new term assurance premiums, 2012-22
                                                    • Forecast methodology
                                                    • Market Segmentation

                                                      • Protection term assurance accounts for 65% of new contracts
                                                        • Figure 20: Volume of new individual regular-premium term assurance policy sales, by policy type, 2012-16
                                                      • Mortgage term policies cover higher values
                                                        • Protection term policies are mostly level cover
                                                          • Figure 21: Summary of new term assurance business, by type of policy, 2016
                                                        • Critical illness cross-selling rates are higher for mortgage term assurance
                                                          • Figure 22: Critical illness rider benefits as a proportion of new individual term assurance business and new standalone critical illness business, 2012-16
                                                      • Channels to Market

                                                        • Mortgage term market moving away from advice
                                                          • Has the decline in bancassurance sales stopped?
                                                            • Figure 23: Distribution of new mortgage term assurance business, by channel, 2015 and 2016
                                                          • Independent advice more prominent in protection sales
                                                            • Figure 24: Distribution of new protection term assurance business, by channel, 2015 and 2016
                                                          • Non-advised protection sales grow
                                                          • Market Drivers

                                                            • Over half have less than £5,000 in savings and investments
                                                              • Figure 25: Value of savings and investments, April 2017
                                                            • Growth in FTB mortgagers presents opportunities for sales
                                                              • Brexit will impact demand for cover
                                                                • Figure 26: Volume of new mortgages, by purpose, not seasonally adjusted, 2012-16
                                                              • Claims paid transparency will give people confidence
                                                                • Figure 27: Number of claims and claims paid for term assurance policies, 2014-16
                                                            • Companies and Brands – What You Need to Know

                                                              • Legal & General remains the largest life insurer, despite M&A activity
                                                                • Investing in technology is a strategic priority
                                                                  • Prevention rather than payouts
                                                                    • Life assurance advertising spend grows by 5%
                                                                    • Market Share

                                                                      • Legal & General remains the largest life insurer, despite M&A activity
                                                                        • Royal London sales set to continue rising
                                                                          • Figure 28: Top five providers of individual term assurance, by sales volumes, 2015 and 2016
                                                                      • Competitive Strategies

                                                                        • Investing in technology
                                                                          • Aviva merges businesses to focus on online
                                                                            • Robo life insurance
                                                                              • Instant term assurance
                                                                                • Let me take a selfie
                                                                                  • People-first policies
                                                                                    • Tailored policies serve the under-served
                                                                                      • Prevention rather than payouts
                                                                                      • Advertising and Marketing Activity

                                                                                        • Life assurance advertising spend grows by 5%
                                                                                          • Figure 29: Total above-the-line, online display and direct mail advertising expenditure on life assurance products, 2012/13-2016/17
                                                                                        • Specialist providers are the biggest spenders
                                                                                            • Figure 30: Top 10 advertisers of (term) life insurance, 2015/16 and 2016/17
                                                                                          • Vitality focusses on health and wellbeing
                                                                                            • Figure 31: Vitality focusses on health and wellbeing with Ambassadors Joe Root, Maro Itoje, Ellie Simmonds and Jessica Ennis-Hill
                                                                                          • TV advertising attracts highest proportion of spend
                                                                                            • Figure 32: Proportional distribution of (term) life advertising expenditure, by media type, 2015/16 and 2016/17
                                                                                          • Nielsen Ad Intel coverage
                                                                                          • The Consumer – What You Need to Know

                                                                                            • Less than a third hold life insurance
                                                                                              • Low levels of cross-selling in the life insurance market
                                                                                                • Price comparison websites used as a benchmark for costs
                                                                                                  • Cash benefits attract most interest
                                                                                                    • Short-term goals take financial priority over life insurance
                                                                                                      • Only a quarter would be willing to share their data
                                                                                                      • Insurance Product Ownership

                                                                                                        • Less than a third hold life insurance
                                                                                                          • Figure 33: Insurance product ownership, April 2017
                                                                                                        • 45-54-year-olds most likely to hold life insurance…
                                                                                                          • …but there are opportunities to increase cover among younger groups
                                                                                                            • Figure 34: Life insurance ownership, by age, April 2017
                                                                                                          • Opportunities to extend cover among women
                                                                                                            • Private renters are least likely to have cover
                                                                                                              • Figure 35: Life insurance ownership, by housing situation, April 2017
                                                                                                            • No cover and no savings
                                                                                                              • Figure 36: Value of savings and investments, by life insurance ownership, April 2017
                                                                                                          • Type of Life Insurance

                                                                                                            • Term assurance is the most popular form of life insurance
                                                                                                              • Figure 37: Type of life insurance product(s) owned, April 2017
                                                                                                          • Cross-selling in the Life Insurance Market

                                                                                                            • Low levels of cross-selling in the life insurance market
                                                                                                              • Figure 38: Other products held with life insurance provider, April 2017
                                                                                                            • Convenience drives cross-selling among 18-44-year-olds
                                                                                                              • Figure 39: Other products held with life insurance provider, April 2017
                                                                                                            • 7% hold critical illness with another provider
                                                                                                            • Researching Life Insurance

                                                                                                              • Price comparison websites used as a benchmark for costs
                                                                                                                • Open banking could provide opportunities for protection market
                                                                                                                  • Figure 40: Sources when looking for information on a new or existing life insurance policy, April 2017
                                                                                                                • People without cover will appreciate face-to-face contact
                                                                                                                  • Figure 41: Sources when looking for information on a new or existing life insurance policy, by life insurance ownership, April 2017
                                                                                                              • Life Insurance Benefits

                                                                                                                • Cash benefits attract most interest
                                                                                                                  • Figure 42: Interest in additional life insurance benefits, April 2017
                                                                                                                • Young people more likely to engage insurers with their lifestyle goals
                                                                                                                  • Aligning goals will lead to higher levels of retention
                                                                                                                    • Figure 43: Interest in additional life insurance benefits, by age, April 2017
                                                                                                                  • Choice of benefits is important
                                                                                                                  • Financial Priorities

                                                                                                                    • Short-term benefits take financial priority
                                                                                                                      • Figure 44: Current financial priorities, April 2017
                                                                                                                    • Only a quarter of parents prioritise ensuring financial security for their family
                                                                                                                        • Figure 45: Current financial priorities, by parental status of children living in the household, April 2017
                                                                                                                      • People have other ways of ensuring financial security
                                                                                                                        • Figure 46: Current financial priorities, by life insurance ownership, April 2017
                                                                                                                      • Flexible policies are key for potential movers
                                                                                                                        • Figure 47: Current financial priorities, by type of life insurance owned, April 2017
                                                                                                                    • Data Sharing with Life Insurance Providers

                                                                                                                      • Only a quarter would be willing to share their data
                                                                                                                        • Figure 48: Interest in data sharing to influence the cost of life insurance premiums, April 2017
                                                                                                                      • Insurers need to be transparent about the use and security of data
                                                                                                                        • 18-34-year-olds most interested in sharing their data
                                                                                                                          • Figure 49: Interest in data sharing to influence the cost of life insurance premiums, by age, April 2017
                                                                                                                        • Existing policyholders more likely to be interested
                                                                                                                          • Figure 50: Interest in data sharing to influence the cost of life insurance premiums, by life insurance product ownership, April 2017
                                                                                                                        • Half of term assurance holders are interested
                                                                                                                          • Figure 51: Interest in data sharing to influence the cost of life insurance premiums, by type of life insurance owned, April 2017
                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                          • Abbreviations
                                                                                                                            • Consumer research methodology
                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                • Figure 52: Additional best- and worst-case forecast table for term assurance premiums, 2017-22
                                                                                                                                • Figure 53: Additional best- and worst-case forecast table for term assurance volume sales, 2017-22
                                                                                                                              • Forecast methodology

                                                                                                                              Companies Covered

                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                              Term Assurance - UK - June 2017

                                                                                                                              US $2,570.96 (Excl.Tax)