“The current economic situation is negatively impacting over-50s life insurance in a number of ways. High inflation is accelerating the rate at which price rises erode the real value of death benefits, weakening appetites for new financial commitments, and making it harder for existing policyholders to keep up with premiums. Insurers can respond to these challenges by boosting value with flexible premiums and inflation-linked benefits.”
– Rich Shepherd, Category Director, Financial Services and Lifestyles
This Report looks at the following areas:
- The impact of the cost of living crisis on the over-50s life insurance market.
- Analysis of the size of the market and forecast for the next five years.
- Discussion of the market share of major players, and competitive strategies and advertising initiatives employed.
- Assessment of ownership of and interest in protection products including over-50s life insurance.
- Analysis of key factors driving demand for products and customer choice between different providers.
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Overview
- Key issues covered in this Report
- Products covered in this Report
- A note about data sources used in the Report
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Executive Summary
- The five year outlook for over-50s guaranteed acceptance life insurance
- Figure 1: Category outlook for over-50s guaranteed acceptance life insurance, 2023-27
- The market
- High inflation has prompted a sharp drop in sales
- Figure 2: Market forecast for new guaranteed acceptance whole-of-life insurance sales (volume),2022-27
- New regulations bring greater protections for consumers and competition to the market
- Companies and brands
- SunLife continues to dominate the guaranteed acceptance market
- Figure 3: Top five underwriters of guaranteed acceptance whole-of-life insurance by volume of new business, 2020-21
- Above-the-line adspend fell again in 2022
- Figure 4: Total above-the line, online display and direct mail advertising expenditure on over-50s life insurance and other life protection products, 2017/18-2021/22
- The consumer
- 9% of over-50s have a guaranteed acceptance life insurance policy
- Figure 5: Ownership of over-50s life insurance and related products, 2022
- 22% of non-policyholders would consider over-50s cover
- Figure 6: Interest in over-50s life insurance and prepaid funeral plans, 2022
- Covering funeral costs are the key motivation for policy purchases
- Figure 7: Main reason for buying or considering buying over-50s life insurance, 2022
- Aggregators could come to dominate the market
- Figure 8: Sources of product information consumers would use when taking out a new over-50s life insurance policy, 2022
- Funeral benefits are the top consideration between providers
- Figure 9: Key factors when choosing an over-50s life insurance provider, 2022
- Targeted advertising is essential but easy to get wrong
- Figure 10: Consumer attitudes towards over-50s life insurance, 2022
- The five year outlook for over-50s guaranteed acceptance life insurance
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Issues and Insights
- High inflation is a problem for new and existing customers
- Consumer Duty will pose new questions of value and suitability
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Market Size and Performance
- New business sales to decline…
- Figure 11: Volume and value of new guaranteed acceptance whole-of-life insurance business – ABI members, 2017-22
- … with the market expected to have fallen by a quarter in 2022
- Average premiums have been broadly stable for five years
- Figure 12: Average annual premium for new guaranteed acceptance whole-of-life insurance, 2017-22
- New business sales to decline…
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Market Forecast
- Sales to recover as concerns over inflation recede
- Figure 13: Category outlook for over-50s guaranteed acceptance life insurance , 2023-27
- New contracts forecast to reach 271,000 by 2027
- Figure 14: Market forecast for new guaranteed acceptance whole-of-life insurance sales (volume),2022-27
- Competition and changing preferences should keep average premiums stable
- Figure 15: Market forecast for new guaranteed acceptance whole-of-life insurance sales (value),2022-27
- Learnings from the last income squeeze
- Forecast methodology
- Sales to recover as concerns over inflation recede
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Channels to Market
- Almost all new business is non-advised
- Figure 16: Proportional distribution of new guaranteed acceptance life insurance contracts by sales channel, 2017-22
- Almost all new business is non-advised
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Recent Claims Performance
- Claims costs were broadly level in 2021
- Figure 17: Volume and value of claims paid on individual protection products, 2021
- Claims costs were broadly level in 2021
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Market Drivers
- Inflation is the key concern for consumers and brands…
- …and despite government support, energy prices are still a major concern
- Consumer spending power will be curbed
- Consumers’ financial wellbeing has fallen from the highs of 2021…
- Figure 18: Household financial wellbeing index, 2016-23
- …and most people are feeling the effects of price rises
- UK’s ageing population will provide an ever-expanding customer base
- Figure 19: Projected size of UK population and proportion of over-50s, 2020-based projections, 2020-70
- Funeral plans pose the biggest threat to over-50s life insurance
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Regulatory and Legislative Changes
- Prepaid funeral plans regulation will provide a reputational boost
- Consumer Duty increases the regulatory burden but should improve customer outcomes
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Market Share
- SunLife continues to dominate the guaranteed acceptance market
- Figure 20: Top five underwriters of guaranteed acceptance whole-of-life insurance by volume of new business, 2020-21
- Exits of Royal London and Promis Life will shake up the rankings
- SunLife continues to dominate the guaranteed acceptance market
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Competitive Strategies
- Offering freebies is a key marketing strategy
- Scottish Friendly offers enhanced coverage with new over-50s plan
- A timely reminder of the value of increasing benefits
- SunLife partners with iptiQ to launch Guaranteed Inheritance Plan
- Health and wellbeing support offers more tangible value
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Advertising and Marketing Activity
- Above-the-line adspend fell again in 2022
- Figure 21: Total above-the line, online display and direct mail advertising expenditure on over-50s life insurance and other life protection products, 2017/18-2021/22
- SunLife accounts for around two-thirds of advertising expenditure
- Figure 22: Top seven advertisers of over-50s life insurance, based on above-the-line, online display and direct mail advertising expenditure, 2019/20-2021/22
- TV is increasingly dominant but direct mail is still an important channel
- Figure 23: Proportional distribution of above-the-line, online display and direct mail advertising expenditure on over-50s life insurance, by media type, 2019/20-2021/22
- Nielsen Ad Intel coverage
- Above-the-line adspend fell again in 2022
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Protection Product Ownership
- 9% of over-50s have a guaranteed acceptance life insurance policy…
- Figure 24: Ownership of over-50s life insurance and related products, 2022
- … rising to 17% of over-75s
- Figure 25: Ownership of selected over-50s life insurance and related products, by age, 2021
- The customer base is economically well-defined
- Just 12% likely to cancel their policy in response to inflationary pressure
- Figure 26: Likelihood that over-50s life insurance policyholders will cancel their cover due to the rising cost of living, 2022
- 9% of over-50s have a guaranteed acceptance life insurance policy…
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Interest in Over-50s Life Insurance
- 22% of non-policyholders would consider over-50s cover
- Figure 27: Interest in over-50s life insurance and prepaid funeral plans, 2022
- Target younger over-50s to expand the market
- Figure 28: Interest in over-50s life insurance and prepaid funeral plans, by age, 2022
- 22% of non-policyholders would consider over-50s cover
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Life Insurance Motivations
- Covering funeral costs are the key motivation for policy purchases
- Figure 29: Main reason for buying or considering buying over-50s life insurance, 2022
- Potential customers are more focused on paying for funerals in full
- Figure 30: Main reason for buying or considering buying over-50s life insurance, by ownership of over-50s guaranteed acceptance life insurance, 2022
- Flexibility as a point of differentiation
- Covering funeral costs are the key motivation for policy purchases
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Sources of Life Insurance Information
- Aggregators could come to dominate the market
- Figure 31: Sources of product information consumers would use when taking out a new over-50s life insurance policy, 2022
- A fifth of non-policyholders don’t know where they’d find product information
- Figure 32: Sources of product information consumers would use when taking out a new over-50s life insurance policy, by ownership of over-50s guaranteed acceptance life insurance, 2022
- Expected reliance on financial advice could be a barrier to entry
- Figure 33: Sources of product information consumers would use when taking out a new over-50s life insurance policy, by consideration of over-50s guaranteed acceptance life insurance, 2022
- Aggregators could come to dominate the market
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Incentives to Buy Life Insurance
- Funeral benefits are the top consideration…
- Figure 34: Key factors when choosing an over-50s life insurance provider, 2022
- … while cash is a particularly strong incentive among Gen X…
- Figure 35: Key factors when choosing an over-50s life insurance provider, by generation, 2022
- … and combining both could reach three quarters of the potential market
- Figure 36: TURF Analysis – Over-50s Guaranteed Accepted Life Insurance, September 2022
- More holistic health support would align with wider lifestyle goals
- Funeral benefits are the top consideration…
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Attitudes towards Over-50s Life Insurance
- Targeted advertising is essential but easy to get wrong
- Figure 37: Consumer attitudes towards over-50s life insurance, 2022
- Over-50s plans are differentiated from funeral plans, but benefits are less clear
- Figure 38: Agreement with selected consumer attitudes towards over-50s life insurance, by protection product ownership, 2022
- Negative perceptions of the product are widespread
- Targeted advertising is essential but easy to get wrong
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Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Consumer research methodology
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Appendix – Forecast Methodology
- Market forecast and prediction intervals
- Volume
- Figure 39: Forecast for volume sales of over-50s guaranteed acceptance life insurance, 2022-27
- Value
- Figure 40: Forecast for value of sales of over-50s guaranteed acceptance life insurance, 2022-27
- Market drivers and assumptions
- Forecast methodology
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Appendix – TURF Analysis Methodology
- Methodology
- Figure 41: TURF Analysis – Over-50s Guaranteed Accepted Life Insurance, September 2022
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- Figure 42: Table – TURF Analysis – Over-50s Guaranteed Accepted Life Insurance, September 2022
- Methodology
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