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Whole-of-Life Insurance - UK - July 2018

"The whole-of-life market has experienced a difficult period over the past five years but there are signs that this may be coming to an end. A large portion of over-50s have little in the way of savings, providing an opportunity for insurers to provide a cheap route to providing security for dependents. If providers are able to provide innovative new products, whilst simultaneously adapting their advertising campaigns to the increasingly youthful minded over-50s, the market could be set for a return to growth."
- Douglas Kitchen, Financial Services Analyst

This Report looks at the following areas:

  • Reinvigorate advertising to increase ownership
  • Significant innovation needed

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Table of contents

  1. Overview

    • What you need to know
      • Report scope and definition
      • Executive Summary

          • The market
            • New premiums fell to £96 million in 2017
              • Figure 1: Forecast for total value of new whole-of-life premiums, 2013-2023
            • 85% of all sales in 2017 were made without advice
              • Figure 2: Whole-of-life and guaranteed acceptance sales channels, 2016 and 2017
            • Companies and brands
              • SunLife is the biggest provider of whole-of-life insurance
                • Figure 3: Market share of top five product providers, measured by new individual whole-of-life sales*, 2017
              • The consumer
                • Confusion over product ownership
                  • Figure 4: Life insurance product ownership, April 2018
                • Direct mail an unpopular route to ownership
                  • TV advertising dominates in guaranteed acceptance market
                    • Figure 5: Sources used when choosing life insurance policy, by product ownership, April 2018
                  • Over-50s’ online usage growing
                    • Figure 6: How over-50s arranged their life insurance policy, by age, April 2018
                  • Low payments and guaranteed payback schemes are the most appealing features
                    • Figure 7: Interest in new whole-of-life features, by age, April 2018
                  • Under-55s more likely to have other spending priorities
                    • Figure 8: Reasons for not holding a life insurance policy, by age, April 2018
                  • What we think
                  • Issues and Insights

                    • Reinvigorate advertising to increase ownership
                      • The facts
                        • The implications
                          • Significant innovation needed
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • New premiums fell to £96 million in 2017
                                  • Guaranteed acceptance plans account for 84% of policies
                                    • 85% of all sales in 2017 were made without advice
                                      • Over-50s market continues to grow
                                      • Market Size and Forecast

                                        • Period of decline continues…
                                          • Figure 9: Whole-of-life and guaranteed acceptance new contracts and premiums, 2013-17
                                        • …but the whole-of-life market is set for recovery
                                          • Figure 10: Forecast for total value of new whole-of-life premiums, 2013-23
                                          • Figure 11: Forecast for total value of new whole-of-life premiums, 2013-23
                                        • Forecast methodology
                                        • Market Segmentation

                                          • Guaranteed acceptance plans account for 84% of policies
                                            • Underwritten market indicates end of significant decline
                                              • Figure 12: New contract distribution, by product type, 2013-17
                                            • Underwritten premiums fall below guaranteed acceptance
                                              • Figure 13: Value of new whole-of-life and guaranteed acceptance premiums, 2013-2017
                                          • Channels to Market

                                            • Non-advised underwritten whole-of-life sales outstrip independent advice sales for the first time.
                                              • Figure 14: Whole-of-life and guaranteed acceptance sales channels, 2016 and 2017
                                            • Advisers still play a key role
                                              • Figure 15: Sources used when choosing most recent life insurance policy, April 2018
                                            • Direct mail an inefficient use of advertising spend
                                            • Market Drivers

                                              • Over-50s population continues to grow
                                                • Figure 16: Population projections, 2017-40
                                              • Over 65s feeling more secure…
                                                • Figure 17: Consumers’ current financial situation, by age, march 2018
                                              • …and more optimistic for the future
                                                • Figure 18: Consumers’ current financial situation, by age, march 2018
                                              • Whole-of-life insurance can help those with little savings
                                                • Figure 19: Value of savings and investments, by age, March 2018
                                            • Regulatory and Legislative Changes

                                              • Inheritance tax changes yet to come into fruition
                                                • Introduction of property related allowance could impact market
                                                  • New insurance regulation adds clarity to an ‘advised’ sale
                                                    • Companies forced to adapt to GDPR
                                                      • Government makes reforms to Funeral Payments
                                                      • Companies and Brands – What You Need to Know

                                                        • SunLife is the biggest provider of whole-of-life insurance
                                                          • Whole-of-life policies continue to expand reach and flexibility
                                                            • Despite difficulties, adspend continues to increase
                                                              • Over-50s life insurance adspend increased by 8% in 2017/18
                                                              • Market Share

                                                                • SunLife retains market dominance
                                                                  • Figure 20: Top five product providers, measured by new individual whole-of-life sales*, 2016 and 2017
                                                                • One Family enters top 5
                                                                • Competitive Strategies

                                                                  • Gift cards still central to strategy for major players
                                                                    • Lowest available premiums continue to tumble
                                                                      • AIG and Zurich focus on speed of delivery
                                                                        • Serious illness cover the selling point for Vitality, Royal London and One family.
                                                                          • British Seniors introduces new ‘Cash in’ option
                                                                            • New entrants to utilise Open Banking
                                                                            • Advertising and Marketing Activity

                                                                              • Over-50s life insurance adspend increased by 8% in 2017/18
                                                                                • Figure 21: Total above-the line, online display and direct mail advertising expenditure on life Insurance Products 2015/16-2017/18
                                                                              • SunLife is the highest-spending advertiser
                                                                                • Figure 22: Total Above- the line, online display and direct mail advertising expenditure for top 10 advertisers of over-50s life insurance, 2015/16-2017/18
                                                                              • Top four all increased adspend
                                                                                • TV and direct mail dominate advertising
                                                                                  • Figure 23: Total above-the line, online display and direct mail advertising of over-50s life insurance, by media type, 2017/18.
                                                                                • Other advertising activity
                                                                                  • Nielsen Ad Intel coverage
                                                                                  • The Consumer – What You Need to Know

                                                                                    • Confusion over product ownership
                                                                                      • Funeral plans a decreasing factor for policy owners
                                                                                        • Over-50s’ online usage growing
                                                                                          • Low payments and guaranteed payback schemes are the most appealing features
                                                                                            • Under-65s more likely to have other spending priorities
                                                                                            • Life Insurance Ownership

                                                                                              • A fifth of over-50s own some form of whole-of-life insurance
                                                                                                • Figure 24: Life insurance product ownership, April 2018
                                                                                              • Consumers appear confused about what type of policy they have
                                                                                                • New innovation may cause further confusion
                                                                                                  • Higher earners more likely to have underwritten whole-of-life cover
                                                                                                    • Figure 25: Product ownership, by household income, April 2018
                                                                                                • Reasons for Purchase

                                                                                                  • Dependents the priority for whole-of-life policyholders…
                                                                                                    • Figure 26: Life insurance purchase triggers, by product ownership, April 2018
                                                                                                  • …but funeral plans a decreasing factor since 2016
                                                                                                    • Figure 27: Consumers’ reasons for purchasing life insurance, 2016 and 2018
                                                                                                • Purchase Journey

                                                                                                  • Face-to-face the preferred method when arranging a policy
                                                                                                    • Online usage set to increase for over-50s market
                                                                                                      • Figure 28: How over-50s arranged their life insurance policy, by age, April 2018
                                                                                                  • Interest in Policy Features

                                                                                                    • Low payments and guaranteed payback schemes are the most appealing features
                                                                                                      • British Seniors guaranteed payback is no more
                                                                                                        • Figure 29: Interest in new whole-of-life features, by age, April 2018
                                                                                                      • Retirees need convincing
                                                                                                        • Figure 30: Interest in new whole-of-life features, by employment status, April2018
                                                                                                      • Non-financial benefits are unpopular among non-policy holders
                                                                                                        • Figure 31: Interest in new whole-of-life features, by life insurance ownership, April 2018
                                                                                                    • Barriers to Ownership of Life Insurance

                                                                                                      • Under-55s more likely to have other spending priorities…
                                                                                                        • Figure 32: Reasons for not holding a life insurance policy, by age, April 2018
                                                                                                      • …while a quarter of over-65s have made other plans
                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                          • Abbreviations
                                                                                                            • Consumer research methodology
                                                                                                            • Appendix – Market Size and Forecast

                                                                                                              • Best case and worst case forecast for total value of whole-of-life market
                                                                                                                • Figure 33: Best-and worst-case forecast for total value of new whole-of-life premiums
                                                                                                              • Forecast methodology

                                                                                                              Whole-of-Life Insurance - UK - July 2018

                                                                                                              US $2,693.85 (Excl.Tax)