Stay ahead of the curve and secure future growth for your business with Mintel’s UK Term Assurance Market Report. Get a 360° view of the UK term assurance market including market size, share and forecasted growth to help you align your business strategy with the needs of your audience.
UK Term Assurance Market Report Looks At The Following Areas:
- Market size and composition, including a five-year forecast of new business.
- Recent developments, market acquisitions and exits, product launches.
- Product penetration by demographics and types of cover.
- Policyholders’ attitudes, beneficial direction and commitment to cover.
- Non-policyholders’ attitudes and intentions to purchase.
- Consumer interest in extra policy benefits.
UK Term Assurance Market Overview
Term assurance is one of the largest sectors in the protection industry, by value and number of policyholders. It is also a mature market that is experiencing minimal growth. Since 2021, when annual sales peaked at 1.71 million, the volume of new individual contracts has fallen. The main contributors to this decline are cost-of-living pressures and a downturn in the UK mortgage market, but also shrinking supply as more brands withdraw from the market.
- UK term assurance market size:Â Volume of new term life insurance contracts fell to an estimated 1.45 million in 2024.
UK Term Life Insurance Market Trends
New policy sales are expected to fall again in 2024. However, there are signs that we are nearing the bottom and a recovery is on the horizon. Lenders have already begun to lower mortgage rates in anticipation of base-rate cuts, and inflationary pressures continue to ease. Elevated house prices will, though, continue to stretch mortgage affordability, meaning conditions will remain tough for a while yet. Therefore, a slow and steady recovery is expected from 2025 onwards, rather than an imminent and rapid turnaround.
Over the longer term, prospects for the market are more positive, with opportunities to expand take-up through the delivery of simplified, low-cost products, and flexible/pick-and-mix solutions. Tw0-thirds of UK of adults do not have any life insurance, of whom around a quarter would consider taking out a policy.
Purchase the full report for a complete overview of the UK term assurance market, including market dynamics and comprehensive analysis from Mintel’s industry experts. Readers of this report may also be interested in Mintel’s UK Over-50s Guaranteed Acceptance Life Insurance Market Report.
Meet The Expert Behind The Analysis
This report is written by Sarah Hitchcock. Sarah has worked for Mintel since 2001, initially as a member of the UK Financial Services team before turning freelance and taking up the role of an associate consultant. As a finance specialist, she works across the full range of UK banking, insurance, investment and pension report titles.
Two thirds of adults have no life cover, despite considerable interest among the non-insured. Providers must tackle inertia to substantially boost take-up.
Sarah Hitchcock
Associate Consultant – Financial Services
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Executive Summary
- Opportunities for the term assurance market
- Tackle misconceptions about affordability to bridge the protection gap
- Promote flexible and shorter term policies to show it’s never too late to take out cover
- Incentivise under-35s with tangible rewards and wellbeing benefits
- Market dynamics and outlook
- Market size & forecast
- Market predictions
- Sales will recover over the next five years
- Legal & General’s market leader position under threat
- Graph 1: share of new term insurance business (% of sales), 2023
- Fortunes are linked to the mortgage market
- What consumers want and why
- Two thirds of adults do not have any life insurance
- A term life cover policy is the most common type of protection insurance
- Graph 2: ownership of life insurance and other protection products, 2024
- There is a large untapped market for simplified life cover
- Life insurance is affordable to many under-35s who currently lack protection
- Around two fifths of policyholders have considered cancelling cover due to high living costs
- Around four in five term insurance policyholders would recommend their provider
- Three quarters of term life policyholders used an aggregator before buying their policy
- Health and wellbeing benefits can make the core proposition more appealing
- Graph 3: most appealing extra/non-contractual policy benefits, by policyholders and non-policyholders, 2024
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Market Dynamics
- Market size
- In-force business stabilises following several years’ growth
- Housing market downturn hits sales of term life insurance…
- Graph 4: volume of new term life insurance contracts, 2019-24
- …leading to a fall in premium income
- Graph 5: value of new term life insurance premiums, 2019-24
- Market forecast
- Annual sales are predicted to rise steadily over the forecast period
- The value of new business is set for stronger growth
- Prospects for the market will start to improve from 2025
- A note on the value forecast
- Market segmentation
- Both types of term assurance have been hit by the recent fall in sales
- Graph 6: number of new term life insurance contracts, by type, 2019-24
- Average premiums have barely grown over the past decade
- Graph 7: average new term life insurance premium, by type, 2014-23
- Mortgage term premiums are higher on average, due to the greater prevalence of CI riders
- CI riders are less popular than a decade ago
- Graph 8: CI rider cross-sell rate, by type, 2014-23
- Channels to market
- Non-advised channels account for a significant minority of sales
- Graph 9: share of new other term life contracts, by channel, 2023
- Graph 10: share of new mortgage term life contracts, by channel, 2023
- Intermediary firms generate over 80% of sales
- Advisers will continue to play a crucial role, but there’s room to develop non-advised channels
- Market share
- Legal & General maintained its market-leading position in 2023
- Number of suppliers shrinks further as Aegon and AIG Life withdraw
- New providers struggle to make inroads
- Market drivers
- Falling inflation prompts cut to the Bank base rate…
- Graph 11: consumer prices index, 2021-24
- …but this won’t be enough to re-energise the mortgage market
- Graph 12: number of mortgage transactions, 2018-24
- First-time buyers represent an important target group, but their number has fallen sharply recently
- Changing tenure and social trends require a new approach
- A slight fall in average sums insured in 2023 indicates affordability concerns
- Graph 13: average sum insured, by type of policy, 2020-23
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What Consumers Want and Why
- Penetration of life insurance and other protection products
- Only a third of adults have life insurance
- Graph 14: ownership of life insurance and other protection products, 2024
- A significant minority of customers have more than one protection product
- Graph 15: ownership of different protection product combinations, 2024
- Mortgage holders with children comprise the core target market
- Take-up is much lower among families in the rental sector
- One in eight policyholders don’t know what type of life cover they have
- Graph 16: type of policy held by life insurance policyholders, 2024
- Family income benefit is a niche product that is not widely understood
- Many couples choose to have their own single-life policy
- Graph 17: segmentation of term life insurance policyholders, by single or joint life cover, 2024
- Beneficiary direction
- Most, but not all, policyholders have made a beneficiary direction
- Graph 18: beneficiary direction made by policyholders, 2024
- Single-life policyholders need greater prompts to cite a beneficiary
- Graph 19: beneficiary direction, by single and joint life policyholders, 2024
- Policyholders’ attitudes and experiences
- The majority of policyholders think life insurance is essential
- Graph 20: policyholders’ agreement with statements about life insurance, 2024
- Cost-of-living pressures have forced two fifths to consider cancelling cover
- High level of customer endorsement means there’s scope to offer “refer a friend” incentives
- Past experience and future consideration of life insurance
- 30% of the non-insured are former policyholders
- Graph 21: past ownership of life insurance by the non-insured, 2024
- Over half of former policyholders cancelled their policy
- Graph 22: reasons for no longer having life insurance, by past ownership of life insurance, 2024
- Around a quarter of the non-insured are open to the idea of getting life insurance
- Graph 23: likelihood of buying life insurance in the future, 2024
- Non-policyholders’ attitudes and experiences
- Avoidance is more of a barrier than affordability
- Graph 24: non-policyholders’ agreement with statements about life insurance, 2024
- Prompting people to consider worst-case scenarios can lead to positive action, if done sensitively
- Too much choice can be bewildering
- Around three fifths of those who can afford life cover are put off by too many product options
- Graph 25: agreement with statements about life insurance by the non-insured and those who can afford a monthly premium of up to £30, 2024
- Attractiveness of policy extras
- Half of all adults find extra health and wellbeing services the most appealing feature of a life policy
- Graph 26: [no title]
- A mix of extra benefits will broaden the product’s overall appeal
- Health and wellbeing perks are effective at attracting a younger audience
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Innovation And Marketing Trends
- Competitive strategies and launch activity
- Say goodbye to two more brands…
- …and hello to two new partnerships
- Life insurers offer perks and benefits to make the proposition more appealing
- Providers launch simple, no-frills products for those who don’t care for bells and whistles
- The Exeter offers “unlimited” remote GP appointments and “Health MOT”
- Movers and shakers
- The demise of DeadHappy
- Advertising and marketing activity
- Providers have cut back on adspend since 2021
- Graph 27: total above-the-line, online display and direct mail advertising on life insurance products, 2019-23
- Vitality focuses on moving forward in life
- Smart Insurance stresses its “family guarantee” in its latest ad
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Appendix
- Supplementary data
- Market size – total market
- Market segmentation – mortgage term
- Market segmentation – other term
- Market segmentation – critical illness riders
- Vitality has increased its adspend year on year since 2019
- Advertising by media type
- Market forecast data and methodology
- Market forecast: underlying data (value)
- Market forecast and prediction intervals (value)
- Market forecast and prediction intervals (volume)
- Forecast methodology
- Report scope and definitions
- Report scope and product definitions
- Other related products
- Sources used in the Report
- Abbreviations
- Methodology
- Consumer research methodology
- Nielsen Ad Intel coverage
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