2021
9
UK Over-50s Guaranteed Acceptance Life Insurance Market Report 2021
2022-01-12T03:18:48+00:00
OX1049079
2195
146747
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Report
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“Sales of over-50s life insurance rely on heavy and consistent advertising to generate awareness and drive demand. Effective marketing strategies are even more of a necessity now, in order to…

UK Over-50s Guaranteed Acceptance Life Insurance Market Report 2021

£ 2,195 (Excl.Tax)

Description

The UK Over-50s Guaranteed Acceptance Life Insurance report identifies consumer attitudes towards leading providers, distribution strategies, and motivational pulls for life insurance in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Over-50s Life Insurance market in the UK.

Current Market Landscape

The COVID-19 pandemic had a huge impact on the guaranteed acceptance life insurance market, with the decline of the market reflecting weaker demand in insurance, with several key providers cutting back on advertising. The economic impact causing many consumers to cut back on unnecessary spending, as well as delaying taking out insurance or making investments.

  • 20% of over-50s who do not have a guaranteed acceptance life insurance plan say they are likely to get one in the future.
  • Sales were down 9% in 2020, falling further in 2021 despite relatively high level of interest.
  • By the end of this decade, the number of over-50s in the UK is predicted to rise by 9%, to 28 million.

During this difficult period, some providers have fared better than others, and a minority (primarily those focused on direct sales) have managed to buck the overall trend and grow new business.

Future Market Trends in Guaranteed Acceptance Life Insurance 

As we approach the end of 2021, the market environment remains challenging for all providers. Rising inflation, along with the expectation of higher borrowing costs and tax increases in 2022, is set to threaten prospects of a swift rebound in sales. With the target market (over-50s on modest incomes) particularly vulnerable to the rise in the cost of living, this will lead some to forego or defer taking out cover.

Helping to counter this softening in demand is the ongoing expansion of the target market. Internet penetration among the oldest age groups will also continue to grow, increasing opportunities to promote and sell products via digital channels and social media.

Read on to discover more details or take a look at all of our UK Finance market research.

Quickly understand

  • The impact of COVID-19 on the market, as well as on the financial situation and wellbeing of over-50s in general.
  • Assessing the size of the market for over-50s life insurance and its potential for growth.
  • Exploring the marketing and distribution strategies employed by the leading providers.
  • Understanding the motivational pulls and influencing factors leading consumers to purchase.
  • Appraising the appeal of some of the most common extra benefits of cover.

Covered in this report

Brands: SunLife, Royal London, iptiQ, AIG, OneFamily, Churchill Insurance, Direct Line, British Seniors, Scottish Friendly, Zestylife, Legal & General, Sainsbury’s Bank, Aviva, Promis Life, Post Office, Neilson Financial Services, Vitality.

Expert analysis from a specialist in the field

This report, written by Utku Tansel, a leading analyst in the Retail sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Sales of over-50s life insurance rely on heavy and consistent advertising to generate awareness and drive demand. Effective marketing strategies are even more of a necessity now, in order to motivate consumers to purchase and turnaround the recent decline in sales.

Sarah Hitchcock
Associate Consultant – Financial Services

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
    • Scope of this Report and product definition
    • A note about data sources used in the Report
  2. Executive Summary

    • Impact of COVID-19 on the over-50s life insurance market
      • Figure 1: Short, medium and long-term impact of COVID-19 on over-50s life insurance market, 2020-25
    • The market
    • Demand will pick up slowly, prompting a steady recovery
      • Figure 2: Market forecast for new guaranteed acceptance whole-of-life insurance sales (volume) – fan chart, 2016-26
    • 97% of new sales were non-advised in 2020
    • Just 2% of whole-of-life claims were COVID-related in 2020
    • Over-50s plans compete with repaid funeral plans
    • Companies and brands
    • SunLife continues to dominate the market…
      • Figure 3: Market shares of largest underwriters of guaranteed acceptance whole-of-life insurance, by volume of new business, 2019-20
    • …but many distributors ensure good levels of competition
    • Providers seek to challenge the market leader by offering extra benefits
    • The consumer
    • Over-70s are almost twice as likely to have a guaranteed acceptance plan than under-70s
      • Figure 4: Ownership of over-50s life insurance and related products, by age, 2021
    • The most popular extras are funeral and terminal illness benefit
      • Figure 5: Proportion of over-50s plan holders who have the benefit and proportion of prospective customers who find it appealing, 2021
    • Many mistakenly believe they have terminal illness cover
    • The primary motivation to purchase is to help pay towards funeral costs
    • Price is the top consideration when choosing a policy
      • Figure 6: Factors influencing choice of provider, ranked in order of significance, 2021
    • One in five without a guaranteed acceptance plan are keen on getting it in the future
      • Figure 7: Agreement with statements about over-50s life insurance, 2021
    • A fifth of potential prospects have been impacted financially by the pandemic
      • Figure 8: Ways in which pandemic has affected the financial health and wellbeing of over-50s, 2021
    • Many over-50s policyholders have not got around to talking to family about their cover
      • Figure 9: Proportion of over-50s who have discussed their insurance cover/funeral plan with family or are intending to within the coming year, by age and product type, 2021
  3. Issues and Insights

    • Providers must clearly communicate the presence of any health and wellbeing support
    • Scope to target term insurance customers as their policies expire
  4. Market Size and Performance

    • Demand weakens as a result of COVID-19
      • Figure 10: Short, medium and long-term impact of COVID-19 on over-50s life insurance market, 2020-25
    • New business was 9% lower in 2020, …
    • …following two years of strong growth
      • Figure 11: Volume and value of new guaranteed acceptance whole-of-life insurance business – ABI members, 2016-21
    • On average, new policyholders pay around £20 in monthly premiums
      • Figure 12: Average annual premium for guaranteed acceptance whole-of-life insurance, 2016-21
  5. Market Forecast

    • Slow and steady recovery in volume sales
      • Figure 13: Market forecast for new guaranteed acceptance whole-of-life insurance sales (volume) – fan chart, 2016-26
    • Pricing pressures will see the value of new business rise at a faster rate
      • Figure 14: Market forecast for new guaranteed acceptance whole-of-life insurance premiums (value) – fan chart, 2016-26
    • Forecast methodology
  6. Channels to Market

    • The vast majority of new policies are sold without advice
      • Figure 15: Proportional distribution of new guaranteed acceptance life insurance contracts by sales channel, 2016-20
    • Distribution strategies vary
    • Internet penetration continues to increase among the target market…
      • Figure 16: Internet penetration among UK over-55s, by age, 2013-20
    • …providing new opportunities for digital sales and marketing
  7. Recent Claims Performance

    • Annual whole-of-life claims equate to around 2% of policies in force
    • Total claims bill grew by just 2% in 2020
      • Figure 17: Number and value of claims paid on individual protection products, 2020
    • COVID-19 accounted for just 2% of whole-of-life claims in 2020
  8. Market Drivers

    • Rising inflation to put added strain on household finances…
    • …along with higher borrowing costs and an increased tax burden…
    • …affecting many among the target market
    • On the plus side, the over-50s population will continue to grow
      • Figure 18: Size of UK population and proportion of over-50s, 1970-2030
    • Mortality rates increase as a result of COVID
      • Figure 19: Age specific mortality rate per 1,000 population, by gender, 2019-20
    • The average funeral costs twice as much now as it did a decade ago
    • Prepaid funeral plans represent the main competition…
    • …although many consumers find it difficult to understand the difference
    • The funeral plan market is smaller…
      • Figure 20: Number of funeral plan sales and number in force, UK, 2016-20
    • …and due to come under FCA regulation
  9. Market Share

    • SunLife extends lead, while Royal London loses share
      • Figure 21: Top five underwriters of guaranteed acceptance whole-of-life insurance by volume of new business, 2019-20
    • Others shuffle places
  10. Competitive Strategies and New Product Launches

    • Top two players diversify into later-life lending
    • Promis Life remains committed to a direct-sales approach…
    • …while AIG ceases to sell direct and through brokers
    • Scottish Friendly launches a new over-50s plan with Zestylife
    • Providers use different strategies to differentiate themselves
    • Aviva strengthens life insurance proposition with new health and wellbeing app
    • OneFamily enhances over-50s proposition by adding new benefits
  11. Advertising and Marketing Activity

    • Pandemic prompts providers to cut back on advertising
      • Figure 22: Total above-the-line, online display and direct mail advertising expenditure on over-50s life insurance and other life protection products, 2017-21
    • SunLife continues to spend the most on advertising
      • Figure 23: Top six advertisers of over-50s life insurance, based on above-the-line, online display and direct mail advertising expenditure, 2017-21
    • Neilson Financial Services substantially increases adspend in 2021
      • Figure 24: Top four advertisers of life protection (excluding over-50s insurance), based on above-the-line, online display and direct mail advertising expenditure, 2017-21
    • Most adspend goes on TV advertising and direct mail
      • Figure 25: Proportional distribution of above-the-line, online display and direct mail advertising expenditure on over-50s life insurance, by media type, 2017-21
    • Nielsen Ad Intel coverage
  12. Product Ownership

    • A third of over-50s have life cover
      • Figure 26: Ownership of over-50s life insurance and related products, by age, 2021
    • Over-70s record highest take-up of over-50s life insurance, but even more have a funeral plan
    • 2% of over-50s have both a funeral plan and over-50s life insurance
    • Other whole-of-life cover attracts a different audience
  13. Ownership and Appeal of Extra Policy Benefits

    • 26% of customers say their plan includes a funeral benefit
      • Figure 27: Benefits included with over-50s life insurance policy, 2021
    • Many mistakenly believe they have terminal illness cover
    • 9% have access to health and wellbeing support services
    • Prospective customers will be most drawn to plans offering funeral and terminal illness benefits
      • Figure 28: Most appealing features of an over-50s life insurance policy among prospective customers, 2021
  14. Motivation to Purchase and Influencing Factors

    • Two thirds bought an over-50s plan to help pay towards their own funeral
      • Figure 29: Main reason for buying over-50s life insurance policy, 2021
    • Provider choice often comes down to price and perceived trust in the brand
      • Figure 30: Factors influencing choice of provider, ranked in order of significance, 2021
  15. Product Awareness and Consideration

    • One in five non-plan holders expect to take out cover in the future
      • Figure 31: Agreement with statements about over-50s life insurance, 2021
    • Interest is greatest among those who’ve previously looked into buying it
      • Figure 32: Agreement with statements about over-50s life insurance – cross-analysis, 2021
    • 31% are more inclined to favour a prepaid funeral plan
      • Figure 33: Agreement with statements about funeral provision, 2021
  16. Later Life Preparations

    • A reluctance to plan for later life among those in their 50s is a key barrier
      • Figure 34: Proportion of over-50s who have made certain later life preparations or are intending to within the coming year, 2021
    • 58% of people with an over-50s whole-of-life plan have discussed their funeral with loved ones…
      • Figure 35: Proportion of over-50s who have made certain later life preparations or are intending to within the coming year, by those who have over-50s life insurance and those likely to get it in the future, 2021
    • …while 59% have informed them of their insurance cover
      • Figure 36: Proportion of over-50s who have discussed their insurance cover/funeral plan with family or are intending to within the coming year, by age and product, 2021
  17. Impact of Pandemic on Personal Finances and Wellbeing

    • Around one in six over-50s have been impacted financially by the pandemic
      • Figure 37: Ways in which pandemic has affected the financial health and wellbeing of over-50s, 2021
    • Those who’ve been prompted to get their finances in order are more inclined to consider life insurance
      • Figure 38: Ways in which pandemic has affected the financial health and wellbeing of over-50s, by top five ways (cross-analysis), 2021
  18. Appendix – Data Sources and Abbreviations

    • Abbreviations
    • Sources
    • Consumer research methodology
  19. Appendix Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 39: Market forecast for new guaranteed acceptance whole-of-life insurance sales (volume), 2021-26
      • Figure 40: Market forecast for new guaranteed acceptance whole-of-life insurance premiums (value), 2021-26
    • Market drivers and assumptions
      • Figure 41: Key drivers affecting Mintel’s market forecast, 2021-26
    • Forecast methodology

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