Table of Contents
Executive Summary
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- Impact of COVID-19 on term assurance
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- Figure 1: Short, medium and long-term impact of COVID-19 on life insurance, August 2020
- The market
- Total premiums and contracts are expected to fall in 2020
- A swift recovery is expected
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- Figure 2: Forecast of new individual term assurance volume sales, 2015-25
- Mortgage term policies are predicted to suffer in 2020…
- ….with the other term market proving more resilient
- Significant growth in non-advised sales for other term policies
- Home loans fell by 90% during lockdown
- Increased focus on cover for higher-risk groups
- Companies and brands
- AIG Life delivers further growth in 2019
- Providers restrict access to cover in light of the outbreak
- Legal & General enhances its proposition for renters
- Aviva launches a new simplified policy
- HSBC and Starling Bank develop new bancassurance solutions
- Neilson Financial Services launches a new protection-only comparison service
- The consumer
- Slight increase in life insurance penetration
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- Figure 3: Ownership of life insurance and other protection products, March 2019 vs April 2020
- COVID-19 drives an increase in consideration…
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- Figure 4: Impact of COVID-19 on likelihood to take out life insurance, April 2020
- …as well as policy reviews
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- Figure 5: Impact of COVID-19 on existing life insurance policyholders, April 2020
- Peace of mind and protecting dependents are the main motivations
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- Figure 6: Reasons for taking out life insurance, April 2020
- Price comparison sites are the preferred route to market
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- Figure 7: Preferred channels when researching a life insurance policy, April 2020
- Banks are in a strong position to drive future growth
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- Figure 8: Attitudes towards life insurance, April 2020
The Impact of COVID-19 on Term Assurance
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- Impact on the market
- Sales expected to decline in 2020
- Providers forced to adapt underwriting criteria
- Impact on consumers
- The outbreak drives increased interest in life insurance
- Greater focus on health and wellbeing to boost engagement
- Impact on companies and brands
- Emphasising the importance of peace of mind will resonate with consumers
Issues and Insights
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- A focus on family and community will drive engagement
- The need to protect those excluded from cover will prove more evident
- Renters and the self-employed provide an opportunity for significant growth
The Market – Key Takeaways
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- A decline in mortgage-related business will impact sales in the short term…
- …but a fast recovery is expected
- Regulatory focus on vulnerable and high-risk groups will continue
Market Size and Forecast
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- Impact of COVID-19 on term assurance
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- Figure 9: Short, medium and long-term impact of COVID-19 on life insurance, August 2020
- Total premiums and contracts are estimated to decline in 2020
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- Figure 10: New individual term assurance sales and average annual premiums, 2015-20
- Both volume sales and premium income are forecast to bounce back
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- Figure 11: Forecast of new individual term assurance volume sales, 2015-25
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- Figure 12: Forecast of new individual term assurance volume sales, 2020-25
- Figure 13: Forecast of new individual term assurance premiums, 2015-25
- Figure 14: Forecast of new individual term assurance premiums, 2020-25
- Market drivers and assumptions
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- Figure 15: Key drivers affecting Mintel’s market forecast (prepared on 20th August 2020), 2015-24
- Learnings from the last recession
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- Figure 16: Volume and value of new individual regular-premium term assurance policy sales, 2007-15
- Forecast methodology
Market Segmentation
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- Mortgage-related business will be the hardest hit
- Other term market should be more resilient
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- Figure 17: Volume and value of new individual regular-premium term assurance policy sales, by policy type, 2015-20
- Average premiums decline for the second consecutive year
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- Figure 18: Average new annual premium – mortgage term vs other term, 2014-19
- Opportunities to boost cross-selling of critical illness cover
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- Figure 19: Critical illness rider cross-sell rate – mortgage term vs other term, 2014-19
Channels to Market
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- Advised sales account for 87% of the mortgage term market
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- Figure 20: Distribution of new mortgage term assurance business, by channel, 2016-19
- Non-advised sales continue to grow for other term policies
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- Figure 21: Distribution of new other term assurance business, by channel, 2016-19
- Bancassurance sales remain low
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- Figure 22: Volume of new term assurance sales via bancassurance, 2015-19
Market Drivers
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- Unemployment is set to more than double during 2020
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- Figure 23: Annual unemployment rate, 2007-24
- Mortgage approvals fall by 90% amid COVID-19 pandemic
- Value of claims paid hits a record high
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- Figure 24: Total value and average claims paid for term assurance, 2016-19
- COVID-19 leads to a greater focus on healthy living and wellness
Regulatory and Legislative Changes
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- FCA extends premium holidays as a result of COVID-19
- BIBA launches an agreement to increase access among higher-risk groups
- Mental Health UK urges firms and government to tackle concerns about access to cover
Companies and Brands – Key Takeaways
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- Providers move to mitigate risks from virus…
- …but need to balance this with protecting the reputation of the industry
- Further focus on renters and the self-employed to boost take-up
- Improving access through direct channels to capitalise on growing interest
Market Share
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- Legal & General retains leading position in 2019
- AIG Life grows new business by 8%
- Aviva and Royal London experience a decline in new business
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- Figure 25: Top five providers of individual term assurance, by sales volume, 2017-19
Company Profiles
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- Legal & General
- Response to COVID-19
- Major product developments
- AIG Life
- Response to COVID-19
- Major product developments
- Aviva
- Response to COVID-19
- Major product developments
- Royal London
- Response to COVID-19
- Major product developments
- Vitality
- Response to COVID-19
- Major product developments
Launch Activity and Innovation
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- New tools help improve access to cover
- In the D2C market…
- …and for advisers
- Further improvements to extend the reach of bancassurance
- Through HSBC’s Select and Cover…
- …and Anorak’s partnership with Starling Bank
- DeadHappy takes a new approach to pricing cover
- Anorak utilises Open Banking to provide automated protection advice
Advertising and Marketing Activity
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- ThisisMoney.co.uk drives a marginal increase in advertising expenditure
- DeadHappy bids to attract the younger market
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- Figure 26: Top 10 advertisers of above-the-line, online display and direct mail advertising expenditure on life insurance, 2018/19 and 2019/20
- Neilson Financial Services unveils its new price comparison service
- Sports starts feature prominently in life insurance campaigns
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
- Usage and awareness strongly correlate with greater level of trust
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- Figure 27: Attitudes towards and usage of selected brands operating in the term assurance market, June 2020
- Key brand metrics
- Awareness is strong across all brands surveyed
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- Figure 28: Key metrics for selected brands operating in the term assurance market, June 2020
- Brand attitudes: LV=, L&G and Aviva associated with customer service and trust
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- Figure 29: Attitudes, by brand operating in the term assurance market, June 2020
- Brand personality: Vitality’s fun image makes it stand out from the crowd
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- Figure 30: Brand personality – macro image, June 2020
- Royal London and Scottish Widows are more associated with prestige and authority
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- Figure 31: Brand personality – micro image, June 2020
- Brand analysis
- Aviva and LV= can draw on their strong reputations
- Legal & General stands out for its competence and reliability
- Vitality’s fun image differentiates it in the market
- Royal London and Scottish Widows are seen as more exclusive
The Consumer – Key Takeaways
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- COVID-19 leads to more engagement in the market
- A focus on peace of mind and family will be important in all communications
- Health and wellbeing benefits will grow in importance
Impact of COVID-19 on Consumer Behaviour
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- COVID-19 leads to an awareness of vulnerability…
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- Figure 32: Financial implications of COVID-19, 21ST-28TH May 2020
- …and the need to manage existing debts
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- Figure 33: Actions in response to COVID-19, May 2020
- Health and wellbeing benefits will be more important than ever
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- Figure 34: Changing priorities around eating healthily and exercise since COVID-19, 7-14TH May 2020
Life Insurance Ownership
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- Marginal increase in life insurance ownership
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- Figure 35: Ownership of life insurance and other protection products, March 2019 vs April 2020
- Non-mortgage-linked cover increases in 2020
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- Figure 36: Type of life insurance policy held, March 2019 vs April 2020
Likelihood to Take Out Life Insurance
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- Likelihood to take out cover increases in 2020
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- Figure 37: Likelihood to take out a life insurance policy, March 2019 vs April 2020
- Over half of those interested have become more so since COVID-19
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- Figure 38: Impact of COVID-19 on likelihood to take out life insurance, April 2020
Impact of COVID-19 on Existing Policyholders
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- COVID-19 could act as trigger for policy reviews
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- Figure 39: Impact of COVID-19 on existing life insurance policyholders, April 2020
Reasons for Taking Out Life Insurance
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- Peace of mind and protecting dependents are identified as the most important reasons
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- Figure 40: Reasons for taking out life insurance, April 2020
- Renters place more of a focus on their family’s financial security
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- Figure 41: Reasons for taking out life insurance, by housing situation, April 2020
- Community and family move to the fore…
- …as well as additional benefits
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- Figure 42: Reasons for taking out life insurance, by impact of COVID-19, April 2020
The Life Insurance Purchase Journey
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- Over half would turn to a price comparison site first
- Over 25% would turn to their main bank for information
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- Figure 43: Preferred channels when researching a life insurance policy, April 2020
- A simple purchase journey is a priority
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- Figure 44: Preferred channels when taking out a life insurance policy, by preferred channels used when researching a life insurance policy, April 2020
Attitudes towards Life Insurance
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- Challenger brands are up against it
- Banks can leverage their position to drive take-up
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- Figure 45: Attitudes towards life insurance, April 2020
- Consumers are looking for convenience…
- …and are willing to consider an alternative route to market
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- Figure 46: Agreement with attitudes towards life insurance, by impact of COVID-19, April 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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