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UK Income Protection Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Income Protection market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Key points included

  • Expand the reach of income protection to increase ownership
  • Educate consumers on the dangers of relying on an employer’s sickness policy

Covered in this report

This report looks into the size of the income protection market, and the drivers which have a significant influence. Mintel’s consumer research examines ownership of income protection in comparison to other protection products, before looking at the expected impact of a loss in income. It also examines attitudes towards employer sickness policies and income protection as a whole. Finally, the report focuses on interest in various protection products, and the extra benefits which income protection providers can offer.

Expert analysis from a specialist in the field

Written by Douglas Kitchen, a leading analyst in the Financial Services sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The income protection market has experienced decent levels of growth over the last three years. However, for the product to become more widely accessible, providers need to move away from relying upon the housing market and target different customers such as renters or the self-employed. Douglas Kitchen
Financial Services Analyst

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • Income protection sales are set to increase, but the market value remains steady
            • Figure 1: New individual (long-term) income protection sales and average premium, 2014-18
          • Value of new income protection contracts forecast to grow year on year
            • Figure 2: Forecast of new individual (long-term) income protection premiums – Fan chart, 2013-23
          • Independent advice accounts for 60% of new sales
            • Figure 3: Distribution of new individual (long-term) income protection premiums and contracts, by channel, 2014-18
          • Almost half have less than £5,000 saved
            • Figure 4: Level of savings and investments, excluding main home and pension savings, December 2018
          • Companies and brands
            • Aviva leads the way in the income protection market…
              • Figure 5: Estimated market shares of the top five providers of new individual income protection, based on volume sales, 2017
            • …and is also looking to target renters
              • ABI and Holloway Friendly are raising awareness of financial vulnerability
                • The consumer
                  • Only 7% own an income protection product
                    • Figure 6: Protection product ownership, December 2018
                  • 60% would struggle with a loss of income within six months
                    • Figure 7: Expected impact of loss of income on financial stability, December 2018
                  • 41% expect to rely upon statutory sick pay
                    • Figure 8: Awareness of employer sick pay policies, December 2018
                  • Half take employers’ sickness policy into account when changing jobs
                    • Figure 9: Attitudes towards employment sick pay policies, December 2018
                  • Over half are interested in a faster application process
                    • Figure 10: Attitudes towards income protection, December 2018
                  • Similar levels of interest in life insurance and income protection
                    • Figure 11: Interest in protection products, December 2018
                  • 52% are interested in extra medical health benefits
                    • Figure 12: Interest in extra income protection benefits, December 2018
                  • What we think
                  • Issues and Insights

                    • Expand the reach of income protection to increase ownership
                      • The facts
                        • The implications
                          • Educate consumers on the dangers of relying on an employer’s sickness policy
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • Income protection sales increase, but average premiums are falling
                                  • Independent advice accounts for 60% of new sales
                                    • Almost half have less than £5,000 saved
                                      • Loans for first-time buyers and home movers decline in 2018
                                        • ‘Good Work Plan’ will make employees more aware of their sickness policy
                                        • Market Size and Forecast

                                          • Number of new sales set to increase for the fourth year in a row
                                            • Figure 13: New individual (long-term) income protection sales and average premium, 2014-18
                                          • Strong performance for group income protection sales in 2018
                                            • Figure 14: Volume and value of new group (long-term) income protection sales, 2014-18
                                          • Market Forecast
                                            • Value of new income protection contracts forecast to grow year on year
                                              • Figure 15: Forecast of new individual (long-term) income protection premiums – Fan chart, 2013-23
                                              • Figure 16: Forecast of new individual (long-term) income protection premiums, 2013-23
                                            • Forecast methodology
                                            • Channels to Market

                                              • Independent advice remains the main route to market…
                                                • …but non-advised sales are on the rise
                                                  • Figure 17: Distribution of new individual (long-term) income protection premiums and contracts, by channel, 2014-18
                                                • Bancassurance accounts for just under half of the non-advised market
                                                  • Figure 18: Distribution of new individual (long-term) bancassurance income protection premiums, by channel, 2014-18
                                              • Market Drivers

                                                • Almost half have less than £5,000 saved
                                                  • Figure 19: Level of savings and investments, excluding main home and pension savings, December 2018
                                                • Number of first-time buyers and home movers declined in 2018
                                                  • Figure 20: Volume of house purchase loans, by type of borrower, 2012-18
                                                • Earnings growth overtakes inflation…
                                                  • Figure 21: Average weekly earnings growth vs inflation, November 2008-November 2018
                                                • …but over 50% are concerned about the effect of Brexit on the cost of living
                                                  • Figure 22: Attitudes towards the effect of Brexit on the cost of living, July 2016-November 2018
                                                • Self-employed workers are rapidly rising
                                                  • Figure 23: Employment trends, by working status, 2000-18
                                                • One in five policies sold in 2018 were on a short-term basis
                                                  • Figure 24: Income protection policies, by benefit term, 2018
                                              • Regulatory and Legislative Changes

                                                • ‘Good Work Plan’ will clarify employees’ sick pay policy
                                                  • Mortgage-specific payments will not affect means-tested benefits
                                                    • MPs discuss need for income protection
                                                    • Companies and Brands – What You Need to Know

                                                      • Aviva is the largest provider in the income protection market…
                                                        • …and is also looking to target renters
                                                          • ABI and Holloway Friendly are raising awareness of financial vulnerability
                                                          • Market Share

                                                            • Aviva tops the list in 2017
                                                              • Smaller providers are gaining ground
                                                                • Figure 25: Estimated market shares of the top five providers of new individual income protection, based on volume sales, 2017
                                                            • Company Profiles

                                                              • Aviva
                                                                • Recent performance and developments
                                                                  • LV=
                                                                    • Recent performance and developments
                                                                      • Legal & General
                                                                        • Recent performance and developments
                                                                          • Royal London
                                                                            • Recent performance and developments
                                                                              • The Exeter
                                                                                • Recent performance and developments
                                                                                • Launch Activity and Innovation

                                                                                  • Zurich releases new policy with a lump-sum payment option
                                                                                    • ABI and Holloway Friendly are raising awareness of financial vulnerability
                                                                                      • Canada Life revamps its employee benefits
                                                                                        • RedArc Nurses introduces a mental health app for insurers
                                                                                          • Aventus is looking to speed up the insurance buying process
                                                                                          • The Consumer – What You Need to Know

                                                                                            • Just 7% own income protection
                                                                                              • 60% would struggle within six months with a loss of income
                                                                                                • Half consider sickness policy when changing jobs
                                                                                                  • Over half are interested in a faster application process
                                                                                                    • Similar levels of interest in life insurance and income protection
                                                                                                      • 52% are interested in extra medical health benefits
                                                                                                      • Protection Product Ownership

                                                                                                        • Less than one in 10 own income protection
                                                                                                          • Income protection needs to adapt to reach a wider audience
                                                                                                            • Figure 26: Protection product ownership, December 2018
                                                                                                          • Dual-parent families are the most likely to have a policy
                                                                                                            • Figure 27: Ownership of income protection products, by lifestage, December 2018
                                                                                                        • Expected Impact of Loss of Income on Financial Stability

                                                                                                          • Majority would struggle within 12 months
                                                                                                            • Figure 28: Expected impact of loss of income on financial stability, December 2018
                                                                                                          • A significant minority are overly optimistic about their financial resilience
                                                                                                            • Figure 29: Expected impact of loss of income on financial stability, by value of savings and investments, December 2018
                                                                                                          • Renters highly likely to be in trouble within six months
                                                                                                            • Figure 30: Expected impact of loss of income on financial stability, by housing situation, December 2018
                                                                                                        • Awareness of Employer Sickness Policies

                                                                                                          • 41% are reliant upon statutory sick pay
                                                                                                            • Figure 31: Awareness of employer sick pay policies, December 2018
                                                                                                          • Lack of awareness and ownership among those most in need
                                                                                                            • Figure 32: Awareness of employer sick pay policies, by ownership of income protection and accident or sickness cover, December 2018
                                                                                                        • Attitudes towards Employment Sickness Policies

                                                                                                          • 50% consider sickness policy when changing jobs
                                                                                                            • Figure 33: Attitudes towards employment sick pay policies, December 2018
                                                                                                          • Greater understanding will lead to increased ownership
                                                                                                            • Figure 34: Agreement with the statement ‘I fully understand my employer’s sickness policy’, by ownership of income protection or accident or sickness cover, December 2018
                                                                                                        • Attitudes towards Income Protection

                                                                                                          • A faster application process could convince over 50%
                                                                                                            • Case Study: Anorak is using Open Banking to provide life insurance
                                                                                                              • Figure 35: Attitudes towards income protection, December 2018
                                                                                                            • Awareness of income protection cover is still an issue
                                                                                                              • Figure 36: Response to the statement “I find income protection hard to understand”, by expected impact of loss of income on financial stability, December 2018
                                                                                                            • Self-employed more likely to identify need for cover
                                                                                                              • Figure 37: Response to the statement “I am confident that I do not need a protection policy’, by employment status, December 2018
                                                                                                          • Interest in Protection Products

                                                                                                            • Little difference when it comes to interest in life insurance and income protection
                                                                                                              • Figure 38: Interest in protection products, December 2018
                                                                                                            • Less than one in five one-person households are interested in income protection
                                                                                                              • Figure 39: Interest in income protection, by lifestage, December 2018
                                                                                                          • Interest in Extra Income Protection Benefits

                                                                                                            • Over half would like extra medical health benefits
                                                                                                              • Support for mental health offers a point of differentiation
                                                                                                                • 36% are interested in rewards for a healthy lifestyle
                                                                                                                  • Figure 40: Interest in extra income protection benefits, December 2018
                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                  • Product definitions
                                                                                                                    • Income protection
                                                                                                                      • Accident, sickness and unemployment (ASU) insurance
                                                                                                                        • Personal accident and sickness insurance
                                                                                                                          • Unemployment cover
                                                                                                                            • Personal accident insurance
                                                                                                                              • Mortgage payment protection insurance (MPPI)
                                                                                                                                • Critical illness cover
                                                                                                                                  • Life insurance
                                                                                                                                    • Abbreviations
                                                                                                                                      • Consumer research methodology
                                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                                          • Figure 41: Forecast of new individual (long-term) income protection premiums, at current and constant prices, 2018-23
                                                                                                                                        • Forecast methodology