2026
9
UK Income Protection Market Report 2026
2026-03-30T16:01:13+00:00
REP5330934E_6667_4053_B093_4E666720533D
2195
192278
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Report
en_GB
Most UK workers lack any form of income protection. Yet 59% expect to face financial hardship within six months of not working due to an unexpected illness and a further…
UK
Insurance
simple

UK Income Protection Market Report 2026

"Despite strong sales, there remains a significant income protection gap. Tackling this requires innovation and renewed effort to improve consumer understanding."

Sarah Hitchcock, Associate Consultant – Financial Services

Sarah Hitchcock, Associate Consultant – Financial Services

UK Income Protection Industry – Trends and Insights

  • Most UK workers lack any form of income protection. Yet 59% expect to face financial hardship within six months of not working due to an unexpected illness and a further 15% have no idea how long they would manage for. Sales of income protection have grown strongly since the pandemic, and yet a substantial protection gap remains.
  • The Financial Conduct Authority (FCA) has made narrowing the gap a key area of focus as part of its ongoing market study into the protection market. With the help of stakeholders, the regulator plans to explore ways of harnessing digital technology, and using targeted support, to improve understanding and access to products that financially protect individuals and families from a loss of income due to illness. This presents a major opportunity for the industry; it will lead to increased consumer engagement and will help convert the 34% of uninsured workers who express interest in buying an income protection policy.
  • Alongside these positive developments, the regulator has also shone a light on the lower claims ratios on income protection versus other protection products. While the FCA acknowledges there may be good reasons for this, providers must closely monitor and review claims data to ensure fair value, and to mitigate the risk of future intervention.

This Report Looks at the Following Areas:

  • Recent market performance and expected performance over the next five years, by gross written premium (GWP) and volume of new sales.
  • Market drivers and regulatory developments.
  • Key provider market share, recent market movements and product innovation.
  • Ownership of income protection by UK consumers and motivations for taking out cover.
  • Financial resilience of non-policyholders and interest in getting income protection.
  • Amount prospective buyers are prepared to pay in premiums versus the amount policyholders are paying.
  • Policyholder satisfaction, understanding, and attitudes to enhanced cover benefits.
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  1. EXECUTIVE SUMMARY

    • What you need to know
    • Outlook for the individual income protection market
    • Opportunities
    • Super-apps combined with guidance features could prove the answer to the “advice” dilemma
    • Remind advisers of the value of LPT’s inclusion in their toolkit
    • Increasing digitisation provides opportunities to target key groups, nudge procrastinators and simplify journeys
  2. THE MARKET

    • Snapshot – market size and forecast
    • Consumers and the economic outlook
    • Main market drivers
    • Sales have more than doubled in a decade
    • Graph 1: volume of new individual income protection policy sales, 2016-25
    • Recent years have seen a shift towards shorter benefit terms
    • Average premiums have fallen, reflecting a shift towards cheaper forms of cover
    • Graph 2: average new individual income protection premium, 2016-25
    • Limited benefit policies also popular with employers
    • Rising cost pressures heighten the need for inflation-proofing cover
    • Graph 3: volume and value of new individual income protection claims paid, 2019-24
    • A higher claim rejection rate puts trust in jeopardy
    • Graph 4: claims acceptance rate* for individual income protection, 2019-24
    • Advisers generate the majority of income protection sales
    • Aviva and L&G are the largest providers of individual income protection
    • Graph 5: market shares of top five providers of individual income protection*, 2023-24
    • Income protection market set for continued strong growth
    • Graph 6: volume of new individual income protection policy sales – fan chart, 2019-30
    • Value of new business also expected to rise at a healthy rate
    • Graph 7: value of new individual income protection premiums – fan chart, 2019-30
    • FCA’s renewed focus on narrowing the protection gap will drive innovation and growth
  3. THE CONSUMER

    • How to grow product ownership
    • Most UK workers fail to protect their income
    • Improve uptake and retention rates among those in middle age
    • Under-represented groups need specific targeting
    • Graph 8: ownership of long or short-term income protection*, by gender, employment and household income status, 2026
    • Convert interest into action by understanding motivation
    • A change in circumstance or lifestage event can prompt a sale
    • Relatable scenarios will improve the effectiveness of advertising and social media campaigns
    • Providing peace of mind to those concerned about the prospect of ill-health is a powerful driver
    • Most people would struggle financially within six months of not working
    • Engage, inform and nudge the non-insured
    • Scope to expand the market
    • Strong interest shown by younger adults
    • Guide people to strengthen their financial resilience
    • LPT can more effectively compete with general insurance solutions
    • Many people are confused about the different cover types
    • Offer optional enhanced benefits to upsell cover
    • Most customers are paying £30 a month or less for their cover
    • Graph 9: amount of monthly premium being paid by customers versus amount prospective customers would be willing to pay, 2026
    • Half of prospective customers are only willing to pay £20 or less a month
    • Significant interest in paying extra for full cover
    • Popularity of enhanced benefits highlights upselling opportunity
  4. INNOVATION AND MARKETING

    • Providers seek to improve coverage, access and flexibility
    • National Friendly gains a new partner and launches adviser campaign
  5. APPENDIX

    • Report scope and market definition
    • Other related products
    • The market
    • Market size – underlying data
    • Forecast methodology
    • Forecast methodology – fan chart
    • Market size and forecast of individual income protection
    • Market forecast and prediction intervals: value
    • Market forecast and prediction intervals: volume
    • The consumer
    • Consumer research questions
    • Consumer research methodology
    • UK generation groups
    • Abbreviations

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