Table of Contents
Executive Summary
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- The market
- Fourth consecutive year of market growth
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- Figure 1: Forecast of new individual critical illness premiums, at current prices, 2014-24
- 91% of policies are sold as a rider benefit
- Rise in non-advised policies
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- Figure 2: Channels to market, new critical illness policies, 2015-19
- Fall in housing transactions but high levels of first-time buyers
- Companies and brands
- L&G remains the market leader
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- Figure 3: Market shares by volume of new individual critical illness premiums, 2018
- Simplifying language to improve appeal
- Boosting cover at key life stages
- The consumer
- One in 10 has critical illness cover
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- Figure 4: protection insurance ownership, December 2019
- More than half of 18-24s would consider cover
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- Figure 5: Consideration of critical illness cover, December 2019
- Peace of mind drives purchases
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- Figure 6: Reasons for taking out critical illness cover, December 2019
- A fifth won’t consider a policy because they don’t trust insurers
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- Figure 7: Reasons for not considering taking out critical illness cover, December 2019
- 45% pay less than £40 a month
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- Figure 8: Reality versus perception on cost of critical illness cover, December 2019
- Over half of households lack financial resilience
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- Figure 9: Financial resilience, December 2019
- Young people are overly reliant on credit and family/friends
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- Figure 10: How they would fund a period of illness or disability, December 2019
- Lack of faith in payouts
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- Figure 11: Attitudes towards critical illness cover, December 2019
- What we think
Issues and Insights
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- Adapting to the challenge of less predictable lifestyles
- The facts
- The implications
- Progress made on transparency and simplification but still a way to go
- The facts
- The implications
The Market – What You Need to Know
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- Fourth consecutive year of market growth
- 91% of policies are sold as a rider benefit
- Rise in non-advised policies
- Fall in housing transactions but high levels of first-time buyers
Market Size and Forecast
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- Fourth consecutive year of growth
- Slow and steady growth forecast
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- Figure 12: Forecast of new individual critical illness premiums, at current prices, 2014-24
- Figure 13: Forecast of new individual critical illness premiums, at current prices, 2014-24
- Strong growth in new policies looks set to slow
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- Figure 14: Forecast of new individual critical illness policy sales, 2014-24
- Figure 15: Forecast of new individual critical illness policy sales, 2014-24
- Forecast methodology
Market Segmentation
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- Vast majority of policies are sold as a rider benefit
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- Figure 16: Market segmentation, 2015-19
- Mortgage term cross-sell rate drops slightly
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- Figure 17: Critical illness rider, cross-sell rate, 2015-19
Channels to Market
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- Rise in non-advised policies
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- Figure 18: Channels to market, new critical illness policies, 2015-19
- A quarter of other term riders are non-advised
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- Figure 19: Channels to market, by market segmentation, 2019
Market Drivers
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- Covid-19 could encourage discussions around protection insurance
- People perceive themselves to be healthier than they are
- Housing transactions fall
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- Figure 20: UK residential property transactions over £40,000, 2010-19
- Changing housing tenure presents challenges and opportunities
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- Figure 21: Buying with a mortgage, by age of the household reference person, 2003/04-2018/19
- Dementia and Alzheimer’s disease are the leading cause of death
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- Figure 22: Leading causes of death in England and Wales, 2018
- Over 90% of claims are paid out
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- Figure 23: Critical illness claims, 2015-18
- Big three conditions account for 81% of claims
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- Figure 24: Reason for claims (volume), 2018
- The changing nature of work
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- Figure 25: Proportion of the working population in self-employment, 1992-2019
Companies and Brands – What You Need to Know
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- L&G remains the market leader
- Simplifying language to improve appeal
- Boosting cover at key life stages
Market Share
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- L&G remains the market leader
- Strong growth for Vitality and Royal London
- Slower volume sales for Aviva
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- Figure 26: Volume sales and market shares of the top five providers of new individual critical illness cover, 2017 and 2018
Competitive Strategies
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- Reducing complexity to increase understanding
- Making claims easier
- Transparency around payouts
- Lower payouts for less severe conditions
- Do you remember… Seven Families?
- Boosting cover at key life stages
- Designing products for the growing rental market
The Consumer – What You Need to Know
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- One in 10 has critical illness cover
- More than half of 18-24s would consider cover
- Peace of mind drives purchases
- A fifth won’t consider a policy because they don’t trust insurers
- 45% pay less than £40 a month
- Over half of households lack financial resilience
- Young people are overly reliant on credit and family/friends
- Lack of faith in payouts
Protection Insurance Ownership
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- 41% have some kind of protection insurance in place
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- Figure 27: protection insurance ownership, December 2019
- Critical illness cover peaks among 25-34 year olds
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- Figure 28: Critical illness cover ownership, by age group, December 2019
- Renters lack cover, but reaching them will prove challenging
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- Figure 29: Critical illness cover ownership, by housing tenure, December 2019
Consideration of Critical Illness Cover
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- Less than a quarter would consider cover
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- Figure 30: Consideration of Critical Illness Cover, December 2019
- Private renters are just as likely to consider critical illness cover
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- Figure 31: Consideration of critical illness cover, by housing tenure, December 2019
Reasons for Taking out Critical Illness Cover
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- Peace of mind is the main reason to take out cover
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- Figure 32: Reasons for having critical illness cover, December 2019
- Appealing to those looking to support children
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- Figure 33: Reasons to consider taking out critical illness cover, December 2019
Reasons for not Considering Critical Illness Cover
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- Many don’t see a need for cover
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- Figure 34: Reasons for not considering taking out critical illness cover, December 2019
- Those who need protection the most, are least able to be able to afford it
- Trust remains an issue
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- Figure 35: Reasons for not considering critical illness cover, by financial resilience, December 2019
What Consumers Pay and Expect to Pay for Critical Illness Cover
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- 45% pay less than £40 a month
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- Figure 36: What consumers pay for critical illness cover, December 2019
- Most people have a good idea of cost
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- Figure 37: Reality versus perception on cost of critical illness cover, December 2019
- But young people may be overestimating the cost of cover
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- Figure 38: Pricing perceptions of critical illness cover, by age group, December 2019
Important Factors in Choosing a Critical Illness Provider
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- Quality is the most important factor
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- Figure 39: Important factors when choosing a critical illness cover provider, December 2019
Financial Resilience
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- A third are confident in their financial resilience
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- Figure 40: Financial resilience, December 2019
- Self-employed and part-time workers lack resilience
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- Figure 41: Financial resilience, by employment status, December 2019
- Women feel more financially vulnerable than men
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- Figure 42: Financial resilience, by age and gender, December 2019
- A third of financial strugglers would consider critical illness cover
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- Figure 43: Financial resilience, by likelihood to consider taking out critical illness cover, December 2019
Sources of Funding for Lost Income
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- Savings are the main source of emergency funding
- Those relying on sick pay may overestimate what they can get
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- Figure 44: How they would fund a period of illness or disability, December 2019
- Young people more likely to rely on friends, family and credit
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- Figure 45: How they would fund a period of illness or disability, by average age and affluence, December 2019
- Overconfidence leaves young people potentially exposed
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- Figure 46: How they would fund a period of illness or disability, by age group, December 2019
Attitudes Towards Critical Illness Cover
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- Clarity of language is required
- Trust is in short supply
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- Figure 47: Attitudes towards critical illness cover, December 2019
- A lack of understanding among younger people
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- Figure 48: Misperceptions about critical illness cover, by age group, December 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Total market sales forecast – best- and worst-case scenarios
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- Figure 49: Forecast of critical illness insurance premiums – best- and worst-case scenarios, by value of new premiums, 2019-24
- Figure 50: Forecast of critical illness insurance premiums – best- and worst-case scenarios, by number of new policies, 2019-24
- Forecast methodology
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