The COVID-19 pandemic has drastically altered people’s lives and in the process caused many to reassess where they stand on a number of important issues. Mintel research reveals that one in four adults aged 50-64 say that COVID-19 has made them think more about life insurance options, with a fifth of adults within this age group saying they would consider an over-50s life insurance policy.

New business prospects for the over-50s guaranteed acceptance life insurance market have been hampered by the pandemic as economic uncertainty has driven many of those in the target market to primarily focus on near-term priorities. This led to a sharp fall in new sales of more than 20% in Q2 2020, compared to the previous quarter. On the plus side, business has stabilised in the second half of the year and the market looks set to regain much of this lost ground by the end of 2020.

Although the pandemic has made people more likely to think about life insurance, when it comes to over-50s life insurance there is a risk that unfavourable press about the product will cause them to turn to alternative arrangements. Consumer websites, which often do not provide glowing reviews of over-50s life insurance plans, are by far the most trusted source of information about the product.

On the other hand, providers have scope to address concerns through product development to increase relevance and trust in the product. Industry commentators have often cited the need for greater flexibility, which Mintel research shows to be a key area of importance for those who would consider taking out a policy. Brands that can design products with the level of flexibility consumers desire will be best positioned to win new business from the key 50-64 year old target demographic.

• The impact of COVID-19 on the over-50s guaranteed acceptance life insurance market.

• The size of the over-50s guaranteed acceptance life insurance market and a five-year forecast for new business.

• Innovation and competitive strategies in the market.

• Penetration of and level of interest in over-50s guaranteed acceptance life insurance and prepaid funeral plans among UK consumers.

• Main reasons for taking out a policy, the most important features desired and the most trusted sources of information for those taking out a new policy.

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. As the case level rose, the government ordered the closure of non-essential stores on 20 March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. It wasn't until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a full month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

The UK lockdown ended as planned on 2 December, but the revised Tiered lockdown meant that almost all of the UK faced heavy restrictions on social activities. Although all non-essential retailers were able to re-open, foodservice and hospitality businesses still face extremely challenging conditions. The successful vaccine trials, however, show that there is a path out of the crisis, and the first UK vaccination was administered on 8 December.

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP will have fallen by 11.3% in 2020, recovering by 5.5% in 2021, and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until Q4 2022. The central scenario has unemployment peaking at 7.5% in Q2 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The Welsh and English lockdowns will inevitably have an impact on GDP and consumer finances, potentially shifting the UK closer to the OBR’s downside scenario. The market forecasts in this Report reflect this new reality.

From the start of the outbreak, we have made the assumption that an effective vaccine would not be widely available until well into 2021. On 9 November, Pfizer and BioNTech announced highly encouraging results from trials of their vaccine, followed by similarly positive results from Moderna and Oxford University/AstraZeneca. This means that a vaccination programme may be brought forward, but a full rollout will take many months, meaning that Mintel is still making the assumption that we will be living with COVID for some time to come.

This Report examines the over-50s guaranteed acceptance life insurance market including prepaid funeral plans. It includes market size and product distribution data, and also details the market’s key players as well as the main factors driving the market. The data in the Market Size and Forecast, Channels to Market and Market Share sections focuses specifically on the sale of over-50s guaranteed acceptance life insurance premiums and do not include information about prepaid funeral plans. However, the consumer research sections, which is conducted on a sample of UK over-50s, measure existing ownership of any type of life insurance including over-50s guaranteed acceptance life insurance and prepaid funeral plans specifically.

The Consumer sections also detail interest among over-50s in arranging over-50s guaranteed acceptance life insurance or prepaid funeral plans and uncover consumer attitudes towards the products. In addition, the consumer research provides insight into the most important products, features and the types of information resources people would most trust if taking out a policy.

For the purposes of this Report, Mintel has used the following definitions:

Over-50s guaranteed acceptance insurance is a long-term policy, typically paid for on a monthly basis, which will pay a cash lump sum when the policyholder dies. These policies are not underwritten and do not require the customer to divulge information about their medical history.

These policies can have a ‘funeral benefit’ option where the policy pays out directly to a funeral provider, usually with an additional amount added by the selected funeral provider. However, this differs from a prepaid funeral plan (see below) in that the payout is not guaranteed to cover the whole cost of the funeral.

Prepaid funeral plans allow the upfront payment of a funeral, either in instalments or via one-off payment to a plan provider or funeral director. Plans vary in terms of what elements are included and most providers offer different levels of plans to cover from basic to more elaborate funeral options.