Table of Contents
Introduction
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- Definitions and report scope
- Abbreviations
Executive Summary
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- The market
- Market size and forecast
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- Figure 1: Forecast for total value of new individual regular-premium whole-of-life insurance policies, 2007-17
- Direct sales account for majority of guaranteed acceptance plan sales
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- Figure 2: Proportional distribution of new whole-of-life premiums, by channel – guaranteed acceptance plan versus other whole-of-life, 2010-11
- Market factors
- Funeral costs continue to rise, increasing the appeal of over-50s life insurance
- Increasing life expectancy helps push down life insurance premiums
- Uncertainty about the impact of RDR on new business
- ECJ gender-neutral pricing and Solvency II could push up premiums
- Companies, brands and innovation
- Top five providers account for 86% of new whole-of-life sales
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- Figure 3: Top five individual product providers, by number of new individual whole-of-life sales, 2010
- Brand promotion
- Who’s innovating?
- The over-50s consumer
- Life insurance ownership
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- Figure 4: Life insurance ownership, March 2012
- Purchase triggers
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- Figure 5: Purchase triggers, March 2012
- Influencing factors
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- Figure 6: Influencing factors, March 2012
- Future financial arrangements
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- Figure 7: Future financial arrangements, March 2012
- What we think
Issues in the Market
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- Why do consumers take out life insurance?
- How are regulatory changes having an impact on the market?
- Is there a high level of mistrust in the over-50s life insurance market?
- Are guaranteed acceptance plans essentially a funeral cost planning tool?
Future Opportunities
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- Simplicity is the name of the game
- Linking policies to children’s savings accounts or education funds
Internal Market Environment
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- Key points
- Growth in over-50s population will increase the number of potential customers…
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- Figure 8: Trends in the UK total population, by age, 1981-2026
- …and longevity should help to push down insurance premiums
- Mortality statistics help to shape guaranteed acceptance plan premiums
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- Figure 9: Number of deaths in England and Wales, by age and gender, 2010
- Average funeral costs continue to rise
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- Figure 10: Average cost of a funeral (including disbursements) in the UK, at current prices – UK, 2004-11
- Funeral payments could be available to those on a low income
Broader Market Environment
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- Key points
- Low interest rates could make over-50s life insurance more appealing
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- Figure 11: Average monthly quoted deposit interest rates, January 2004-January 2012
- Life insurance payouts exceed premium income
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- Figure 12: Total UK life insurance business – benefits paid and total net premium income, 2000-10
- Complaints about life insurance providers and IFAs fell in 2010/11
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- Figure 13: Financial services firms complained about, by sector, 2006/07-2010/11
- Inheritance tax receipts increased slightly in 2010/11
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- Figure 14: Value of IHT transfers on death, 2003/04-2010/11
- Placing policies ‘under trust’ could speed up payouts
- RDR will cause many IFA firms to leave the market…
- ...but focus on life insurance could intensify among remaining IFAs
- ECJ gender-neutral pricing will push up premiums for female clients
- I-E tax regime changes will impact life insurance premiums
- Solvency II to reduce the risk of insolvency, but could push up premiums
- Annual funding requirement for the FSA will rise in 2012/13
Competitive Context
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- Key points
- Number of funeral plans on the up…
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- Figure 15: Number of funeral plan sales and number in force, UK, 2005-11
- …but guaranteed acceptance plans are growing at a faster rate
SWOT Analysis
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- Figure 16: Guaranteed acceptance plan market – SWOT analysis, 2012
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Who’s Innovating?
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- Key points
- PruProtect to offer up-selling scheme to existing term assurance clients
- Sun Life Direct launches online magazine LifeMatters and FinalMatters
- Ellipse links up with bereavement charity to help families
- Healthy Living Programme announced by Legal & General
Market Size and Forecast
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- Key points
- Whole-of-life insurance market continues to grow
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- Figure 17: Volume and value of new individual regular-premium whole-of-life insurance policies, 2001-12
- Guaranteed acceptance plans dominate new sales…
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- Figure 18: Volume of new regular-premium whole-of-life business, by product type, 2006-11
- …but less so when it comes to new premiums
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- Figure 19: Value of new regular-premium whole-of-life business, by product type, 2006-11
- Average guaranteed acceptance plan premiums fell in 2011
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- Figure 20: Average annual premiums for new whole-of-life policies, by product type, 2006-11
- Market forecast
- Value of new whole-of-life business will continue to grow…
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- Figure 21: Forecast for total value of new individual regular-premium whole-of-life insurance policies, 2007-17
- Figure 22: Forecast for total value of new individual regular-premium whole-of-life insurance policies, at current and constant prices, 2007-17
- …driven by an increase in the volume of new sales
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- Figure 23: Forecast for total volume of new individual regular-premium whole-of-life insurance policies, 2007-17
- Figure 24: Forecast for total volume of new individual regular-premium whole-of-life insurance policies, 2007-17
- Forecast methodology
Market Share
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- Key points
- Sun Life Direct continues to dominate the market
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- Figure 25: Top five individual product providers, by number of new individual whole-of-life sales, 2010
- Top five providers command 86% of new whole-of-life business
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- Figure 26: Leading providers of guaranteed acceptance whole-of-life plans, 2011
Companies and Products
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- Sun Life Direct
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- Figure 27: New gross written premiums and investment contract deposits for AXA Wealth Limited, 2011
- Scottish Widows
- Aviva
- LV=
- Legal & General
- Engage Mutual
Brand Communication and Promotion
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- Key points
- Adspend on over-50s life protection up by 14% in the year to January 2012
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- Figure 28: Total advertising expenditure on life protection products, by product category, 2008-12
- Sun Life Direct remains the number one advertiser of over-50s life insurance products
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- Figure 29: Top 15 advertisers of over-50s life insurance products, 2010-12
- Direct mail accounts for 65% of over-50s life insurance adspend
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- Figure 30: Proportional distribution of adspend on over-50s life insurance products, by media type, 2010-12*
Channels to Market
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- Key points
- Non-linked whole-of-life business driven by single-tie and non-intermediated distribution
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- Figure 31: New guaranteed acceptance plan and other non-linked whole-of-life premiums, by channel, 2007-11
- Figure 32: Proportional distribution of new whole-of-life premiums, by channel – guaranteed acceptance plan versus other whole-of-life, 2010-11
- Intermediaries dominate new linked whole-of-life business
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- Figure 33: New linked whole-of-life premiums, by channel, 2010-11
The Over-50s Consumer – Life Insurance Ownership
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- Key points
- Under a quarter of over-50s have whole-of-life cover
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- Figure 34: Life insurance ownership, March 2012
- Half of over-50s do not have any cover and many are unsure about their policy
- Men are more likely to have some type of whole-of-life cover
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- Figure 35: Life insurance ownership, by gender, March 2012
- Guaranteed acceptance plan ownership can be boosted among over-75s
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- Figure 36: Life insurance ownership, by age, March 2012
- Consumers are most likely to have one type of insurance product
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- Figure 37: Repertoire of life insurance ownership, March 2012
The Over-50s Consumer – Purchase Triggers
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- Key points
- Protecting family is the biggest motivator for buying life insurance
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- Figure 38: Purchase triggers, March 2012
- Financial and working situation has an impact on buying motivation
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- Figure 39: Purchase triggers, by working status and gross annual household income, March 2012
- Link between product ownership and purchasing triggers
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- Figure 40: Purchase triggers, by life insurance ownership, March 2012
The Over-50s Consumer – Influencing Factors
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- Key points
- Brand power and low premiums are most important to consumers
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- Figure 41: Influencing factors, March 2012
- Simplicity and recommendations are also highly influential
- Low monthly premiums and an easy application process appeal to guaranteed acceptance plan holders
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- Figure 42: Influencing factors, by life insurance ownership, March 2012
- No health and medical assessments appeal to customers covering funeral costs
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- Figure 43: Influencing factors, by purchasing triggers, March 2012
The Over-50s Consumer – Future Financial Arrangements
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- Key points
- Two thirds of over-50s have made a will
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- Figure 44: Future financial arrangements, March 2012
- There is some scepticism about insurance returns and payouts
- Consumer affluence has an impact on financial planning
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- Figure 45: Future financial arrangements, by socio-economic grouping and gross annual household income, March 2012
- Whole-of-life policyholders more likely to have made a will and plans for funeral costs
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- Figure 46: Future financial arrangements, by life insurance ownership, March 2012
Appendix – Market Size and Forecast
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- Figure 47: Best and worst case forecast for total value of new whole-of-life sales, 2012-17
- Figure 48: Best and worst case forecast for total volume of whole-of-life policies written, 2012-17
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Appendix – The Over-50s Consumer – Life Insurance Ownership
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- Figure 49: Life insurance ownership, by demographics, March 2012
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- Figure 50: Repertoire of life insurance ownership, by demographics, March 2012
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Appendix – The Over-50s Consumer – Purchase Triggers
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- Figure 51: Purchase triggers, by demographics, March 2012
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Appendix – The Over-50s Consumer – Influencing Factors
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- Figure 52: Influencing factors, by demographics, March 2012
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Appendix – The Over-50s Consumer – Future Financial Arrangements
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- Figure 53: Future financial arrangements, by demographics, March 2012
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