Table of Contents
Issues in the Market
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- Report coverage
- Market definitions
- Abbreviations
Insights and Opportunities
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- Significant scope to expand the market
- Improve take-up of term assurance
- Offer flexible propositions to tempt a wider customer base
- Focus on family
- Target one-person households
- Address the issue of non-disclosure
- Whole of life – raise awareness of the tax benefits...
- ...and respond to changing demographics
Market in Brief
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- Business environment
- Demand drivers, cost pressures
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- Figure 1: Factors impacting the life protection market, 2006
- Market context
- Size of the market
- Competitive dynamics
- Marketing activity
- Distribution
- The key findings of Mintel’s consumer research
Product Background
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- Term assurance
- Level term assurance
- Decreasing term assurance
- Pension term assurance
- Whole-of-life insurance
- Endowment insurance
- Motivations to purchase
- Tax planning uses
Fast Forward Trends
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- Trend 1: Marketing as Decipherment
- Definition
- Context
- Market touchpoints/Implications
- Trend 2: Am I Bovvered?
- Definition
- Context
- Market touchpoints/Implications
- Trend 3: I Want It All and I Want it NOW!
- Definition
- Context
- Market touchpoints/Implications
Broader Market Environment
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- Fiscal surroundings present a mixed scenario
- Steady spending growth forecast
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- Figure 2: Total PDI, consumer expenditure and savings, 2002-10
- Share price volatility threatens to undermine investor confidence
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- Figure 3: FTSE 100 and FTSE All Share – daily index movements, July 1999-July 2006
- Burgeoning ABC1 population boosts opportunities...
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- Figure 4: Distribution of the UK adult population, by socio-economic group, 1998-2010
- ...but a fall in the number of 35-44-year-olds could negatively impact on term insurance sales
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- Figure 5: Size of the UK population, by age group, 1998-2010
- Single occupants may have less need for life cover
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- Figure 6: Total number of GB households and one-person housedholds, 1961-2005
Internal Market Environment
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- Pricing for risk
- Defying the Grim Reaper – mortality rates continue to fall
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- Figure 7: Age-standardised mortality rate for all causes, by gender, in England & Wales, 1901-2005
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- Figure 8: Age distribution of registered deaths in England & Wales, by gender, 2005
- Common causes
- The threat of a new influenza pandemic
- Increasing longevity has contributed to falling premiums
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- Figure 9: Life-expectancy at age 50 and 65 for men and women, 1981-2051 (actual and projected)
- Little significant change in smoking behaviour over the past five years
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- Figure 10: Cigarette smoking status in GB, by gender, 1996, 2001 and 2005
- Insurers heed new recommendations to identify HIV risk
- Genetic information
- Housing activity set to slow in the second half of 2006
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- Figure 11: Number of property transactions in England and Wales, 1995-2006
- First-time buyers are stretching further to get on the ladder...
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- Figure 12: UK average house prices (mix-adjusted), 1993-2005
- ...but are returning to the market in growing numbers
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- Figure 13: Total number of loans for house purchase, by type of borrower, 1998-2006
- Regulatory update
- Industry initiatives
Competitive Context
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- Market evolution
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- Figure 14: Summary of new regular-premium life business, 1999-2005
- Related products
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- Figure 15: Number of individual life protection policies in force, by product type, 2001-04
- A bird’s eye perspective
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- Figure 16: Life insurance – the contextual model
- The Life Assurance and Protection Gaps
Strengths and Weaknesses in the Market
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- Figure 17: The UK life protection market – key strengths and weaknesses, 2006
- Evident need for protection...
- ...but a lack of trust inhibits progress
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Who’s Innovating?
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- Norwich Union’s Simplified Life Cover
- Prudential’s Flexible Protection Plan
- Virgin’s Cancer Cover
- M&S Money gets personal, with ‘medical attention’
- Over-50s guaranteed acceptance market is set for development
- Whole-of-life for IHT mitigation – offering guarantees
Trade Perspective
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- About the participants
- Educate customers via regular contact and better communication
- What’s in a name? Pension Term Assurance
- Breathing fresh life into the market
- Future prospects, future challenges
Market Size and Forecast
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- Business in force
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- Figure 18: Individual life insurance business in force at year-end, and sums insured, by product type, 2001-04
- New sales figures – light at the end of the tunnel
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- Figure 19: Number of new individual regular-premium life insurance policies written, by sector, 2001-06
- Term policies account for the majority of new life insurance premiums
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- Figure 20: Value of new individual regular life insurance premiums, by sector, 2001-06
- Market prospects
- Forecast
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- Figure 21: Forecast of the number of new regular-premium individual term and whole-of life policies written, 2006-11
- New premium income will be boosted by price rises
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- Figure 22: Forecast of the value of new regular-premium individual term and whole-of life policies, at current and constant prices, 2006-11
- Factors incorporated
- term assurance
- whole-of-life
Segment Performance
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- New business segmentation
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- Figure 23: An overview of new life protection premiums, by industry classification, 2003-05
- Non-mortgage-linked term boosted by PTA in 2006
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- Figure 24: Number and value of new mortgage-linked and other term assurance contracts, 2001-06
- Average premiums
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- Figure 25: Average annual new individual regular life premium, by type, 2001-06
Market Share
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- Legal & General tops the life business rankings...
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- Figure 26: Life company rankings, by new regular-premium life business, 2003-05
- ...and is the most popular term life insurer
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- Figure 27: Top five providers of individual term assurance, based on new business volumes, 2005
- AXA Sun Life dominates the over-50s whole-of-life market
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- Figure 28: Top five providers of individual whole-of-life assurance, based on new business volumes, 2005
Companies and Products
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- A changing landscape
- The banks’ assault
- Whole-of-life – one player dominates
- AXA Sun Life
- The largest providers of term life assurance
- Legal & General
- Norwich Union
- Friends Provident
- Scottish Widows
- Level term assurance – pricing comparisons
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- Figure 29: Top ten level term monthly premiums for non-smoker aged 35 over 25 years, with £100,000 sum assured, by gender, as at 5 June 2006
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- Figure 30: Average level term assurance premiums, May 2001 and May 2006
Brand Communication and Promotion
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- Industry adspend dips in the 12 months to June 2006
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- Figure 31: Total advertising expenditure on life insurance and protection products, by sector, 2002-06
- AXA Sun Life Direct and Liverpool Victoria invest the most in advertising
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- Figure 32: Advertising expenditure by the top ten advertisers of life insurance products, 2005-06
- Direct mail accounts for the largest proportion of adspend
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- Figure 33: Distribution of life insurance advertising expenditure, by main media, 2002-06
Channels to Market
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- The changing distribution landscape
- New partnerships
- The majority of new term business is sold with advice
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- Figure 34: Distribution value share of mortage-related and other term insurance premiums, by channel, 2001-06 (H1)
- Direct sales of whole-of-life policies account for under a third of new premiums…
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- Figure 35: Distribution value share of whole-of-life premiums, by channel, 2001-06 (H1)
- ...but three-quarters of volume sales
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- Figure 36: Distribution volume share of new individual term assurance and whole-of-life sales, 2005
- Two-thirds of adults are Internet users...
- ...but, as yet, only a very small amount of sales are generated online
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- Figure 37: Websites browsed and purchased from, by type of financial product, November 2002- May 2006
Consumer Financial Activity
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- About the Financial Activity Bulletin
- Activity levels set to be subdued over the next six months
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- Figure 38: Savings, investment, borrowing and debt repayment – consumers’ expected activity, March 2005-June 2006
- A weaker spending climate
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- Figure 39: UK saving and spending climate – indexed, January 2001-June 2006
- Consumers aged 23-29 are set to be most active
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- Figure 40: Expected financial activity by socio-demographic and income groups, June 2006 and average for the last 18 quarters
- Demand for regular life insurance policies up on last quarter
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- Figure 41: Leading financial activities planned in the next six months, June 2005-June 2006
- First-time buyer activity set to increase
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- Figure 42: Intended mortgage and property purchase activity, June 2004-June 2006
- Prospects improve for life and pensions companies
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- Figure 43: Intended life and pensions activity, Q3/Q4 2002-Q2/Q3 2006
- Key target groups
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- Figure 44: Main target groups for life pension, by age, socio-economic group, household income, region and working status, June 2005
The Consumer – Product Penetration and Barriers to Take-up
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- Survey background
- Around half of all adults have life insurance...
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- Figure 45: Ownership of life insurance and other protection products, July 2006
- ...but over two-fifths of them do not know what type of cover they have
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- Figure 46: Ownership of life insurance, by product type, July 2006
- Men are more likely to have protection than women
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- Figure 47: Ownership of life insurance and other protection products, by gender, age and socio-economic group, July 2006
- Penetration peaks in the 35-54 age range
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- Figure 48: Ownership of life insurance and other protection products, by age group, July 2006
- Working couples and the self-employed are major recipient groups
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- Figure 49: Ownership of life insurance and other protection products, by marital status, lifestage, Mintel’s Special Groups and working status, July 2006
- A ‘nice-to-have’ rather than a ‘must-have’ product
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- Figure 50: Ownership of life insurance and other protection products, by tenure, household income, region and ACORN category, July 2006
- Online possibilities
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- Figure 51: Ownership of life insurance and other protection products, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, July 2006
- Whole-of-life reaches its target audience
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- Figure 52: Ownership of life insurance, by type, and former policyholders, by gender, age and socio-economic group, July 2006
- Most former policyholders have paid off their mortgage
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- Figure 53: Ownership of life insurance, by type, and lapsed policyholders, by working status, household income and tenure, July 2006
- Some products compete, while others complement
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- Figure 54: Ownership of selected financial products by all respondents, those with life insurance and those with a mortgage, July 2006
- Most non-subscribers have not even considered getting life cover
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- Figure 55: Reasons for not having life insurance, July 2006
- Cross-analysis reveals lack of understanding is a key barrier to take-up
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- Figure 56: Cross-analysis of reasons for not having life insurance, July 2006
- A fifth of lapsed policyholders stopped cover for economic reasons
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- Figure 57: Reasons for not having life insurance, by lapsed/former policyholders, July 2006
- Reasons change with age...
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- Figure 58: Top five reasons for not having life insurance, by gender and age group, july 2006
- ...and also vary across the socio-economic spectrum
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- Figure 59: Top five reasons for not having life insurance, by socio-economic group, july 2006
The Consumer – Planning for Future Needs
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- Whole-of-life and the financial dilemma
- Those with life cover are more inclined towards planning ahead
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- Figure 60: Agreement with four statements concerning financial planning, by life insurance policyholders and non-subcribers, July 2006
- Retirement planners have the greatest protection cover
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- Figure 61: Ownership of life protection products by those who agree with the four statements, July 2006
- The propensity to plan is partially determined by economic factors
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- Figure 62: Agreement with four statements concerning financial planning, by reasons for not having life assurance by, July 2006
- Strong link between life cover and pensions
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- Figure 63: Cross-analysis – agreement with statements concerning financial planning matters, July 2006
- Over a quarter of pensioners have no will
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- Figure 64: Agreement with statements concerning financial planning matters, by gender, age, socio-economic group, lifestage, marital status and tenure, July 2006
- High income groups and the self-employed are best at financial planning
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- Figure 65: Agreement with statements concerning financial planning matters, by working status, household income, ACORN category and region, July 2006
- Further analysis
The Consumer – Target Groups and Buying Behaviour
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- CHAID analysis identifies target groups
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- Figure 66: Target groups identified for the life insurance and protection market, July 2006
- Nearly a third of adults have multiple protection products
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- Figure 67: Number of life protection product types owned, July 2006
- Up-selling cover
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- Figure 68: Specific ownership breakdown, by number of protection product types owned, July 2006
- The wealthier a person is, the more they need protection
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- Figure 69: Number of protection product types held, by gender, age, socio-economic group, working status, tenure, July 2006
- Men and women recall different buying experiences
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- Figure 70: Experience of arranging life insurance, by type of policy and gender, July 2006
- Younger age groups are pro DIY research
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- Figure 71: Experience of arranging life insurance, by age group, July 2006
- ABs are most likely to take advice
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- Figure 72: Experience of arranging life insurance, by socio-economic group, July 2006
- Independent researchers have a clearer understanding of the cover they buy
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- Figure 73: Cross analysis – experience of arranging life insurance, July 2006
- Men make greater use of the Internet
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- Figure 74: Most common methods to arrange/source life insurance, by gender, age, socio-economic group, and household income, July 2006
- Cohabiting couples are keenest on advice
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- Figure 75: Most common methods to arrange/source life insurance, by marital status, lifestage, working status, and region, July 2006
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