Table of Contents
Executive Summary
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- The market
- Over-50s market to return to growth steadily
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- Figure 1: Forecast for total value of new guaranteed acceptance plans, 2010-19
- New whole-of-life business on a downward path since 2012
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- Figure 2: Volume and value of new individual regular-premium whole-of-life insurance policies, 2006-13
- Guaranteed acceptance plan business driven by non-advised distribution
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- Figure 3: Proportional distribution of new whole-of-life premiums, by sales channel, 2013
- Market factors
- UK’s ageing population increases the target market
- Large proportion of over-50s have low savings
- Funeral costs continue to rise
- Exit of banks and building societies from the over-50s market
- European Gender Directive gives rise to gender-neutral pricing
- ABI releases its Guidance on Over 50s Plans
- Companies, brands and innovation
- Top five players dominate the whole-of-life insurance market
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- Figure 4: Top five individual product providers, by number of new individual whole-of-life sales, 2013
- Recent product developments
- Adspend on over-50s life protection drops by 25% in 2014
- The consumer
- One in five over-50s have whole-of-life cover
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- Figure 5: Life insurance product ownership, March 2014
- Financial protection for family is the principal trigger for life cover purchase
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- Figure 6: Life cover purchase triggers, March 2014
- 31% of policyholders consider brand strength as important
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- Figure 7: Factors influencing choice of life insurance plan, March 2014
- 29% without life insurance have no debts to pay off
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- Figure 8: Reasons for not having life insurance, March 2014
- Nearly half believe funerals cost between £3,000 and £4,999
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- Figure 9: Awareness of funeral costs, March 2014
- Just over one in four respondents are preparing financially for their funeral
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- Figure 10: Financial planning for funeral costs, March 2014
- What we think
Issues and Insights
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- Over-50s product reputation harmed by perceived poor value for money
- The facts
- The implications
- Guaranteed acceptance plans face the challenge of rising funeral costs
- The facts
- The implications
- Increasing premiums to tackle inflation can undermine consumers’ affordability of the product
- The facts
- The implications
Trend Application
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- Educating the over-50s to prepare for the worst
- Established retail brands can enter the over-50s life cover market
- Targeting the over-50s through cross-selling
Market Drivers
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- Key points
- UK’s ageing population increases the target market
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- Figure 11: Trends in the UK total population, by age, 1992-2030
- Large proportion of over-50s have low savings
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- Figure 12: Value of savings, by age, January 2014
- Funeral costs continue to rise
- Exit of banks and building societies from the over-50s market
- Effect of RDR on the whole-of-life market
- European Gender Directive gives rise to gender-neutral pricing
- ABI releases its Guidance on Over 50s Plans
Who’s Innovating?
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- Key points
- Over-50s guaranteed acceptance plans
- Asda’s Over 50s Life Cover offers capped premiums
- British Seniors enters the market with increasing premium policy
- Engage Mutual includes serious and terminal illness cover with its Over 50 Life Cover Plus
- Underwritten whole-of-life insurance
- Aviva’s response to RDR for whole-of-life advisers
- LV= widens its whole-of-life cover options in response to RDR
Market Size and Forecast
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- Key points
- New whole-of-life business on a downward path since 2012
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- Figure 13: Volume and value of new individual regular-premium whole-of-life insurance policies, 2006-13
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- Figure 14: Volume of new regular-premium whole-of-life business, by product type, 2010-13
- Severe drop in post-RDR whole-of-life sales
- Fall in new premiums is less severe
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- Figure 15: Value of new regular-premium whole-of-life business, by product type, 2010-13
- Over-50s market to return to steady growth in value terms
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- Figure 16: Forecast for total value of new guaranteed acceptance plans, 2010-19
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- Figure 17: Forecast for total value of new guaranteed acceptance plans, at current and constant prices, 2010-19
- Slow growth in number of new sales forecast in over-50s market
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- Figure 18: Forecast for total volume of new guaranteed acceptance plans, 2010-19
- Figure 19: Forecast for total volume of new guaranteed acceptance plans, 2010-19
- Forecast methodology
Market Share
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- Key points
- Top five players dominate the whole-of-life insurance market…
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- Figure 20: Top five individual product providers, by number of new individual whole-of-life sales, 2013
- …but competition is increasing
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- Figure 21: Leading providers of over-50s guaranteed acceptance plans, May 2014
Companies and Products
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- Sun Life Direct (AXA Wealth)
- Company description
- Whole-of-life insurance product range
- Recent financial performance
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- Figure 22: Financial performance of AXA Life & Savings business (group level), 2012 and 2013
- Recent activity
- Aviva
- Company description
- Whole-of-life insurance product range
- Recent financial performance
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- Figure 23: Financial performance of Aviva Plc Life Business (UK & Ireland), 2012 and 2013
- Recent activity
- LV=
- Company description
- Whole-of-life insurance product range
- Recent financial performance
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- Figure 24: Financial performance of LV= life protection business, UK, 2012 and 2013
- Recent activity
- PruProtect
- Company description
- Whole-of-life insurance product range
- Recent financial performance
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- Figure 25: Financial performance of PruProtect business*, 2012 and 2013
- Recent activity
- Legal & General
- Company description
- Whole-of-life insurance product range
- Recent financial performance
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- Figure 26: Financial performance of Legal & General Assurance, 2012 and 2013
- Recent activity
- Engage Mutual
- Company description
- Whole-of-life product range
- Recent financial performance
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- Figure 27: Financial performance of Engage Mutual Life Insurance Business, 2012 and 2013
- Recent activity
Brand Communication and Promotion
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- Key points
- Adspend on over-50s life protection dropped by 25% in 2013/14
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- Figure 28: Total advertising expenditure on life protection products, by product category, 2009/10-2013/14 (year ending 30 April)
- Sun Life Direct holds its position as top advertiser in the over-50s life insurance market
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- Figure 29: Top 10 advertisers of over-50s life insurance products, 2011/12-2013/14 (year ending 30 April)
- Direct mail in the over-50s market accounts for over half of adspend
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- Figure 30: Proportional distribution of adspend on over-50s life insurance products, by media type, 2013/14 (year ending 30 April)
- Negative publicity through the media
- A note on adspend
Channels to Market
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- Key points
- Guaranteed acceptance plan business driven by non-advised distribution
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- Figure 31: New individual regular-premium whole-of-life business, by sales channel, 2013
- Figure 32: Proportional distribution of new whole-of-life premiums, by sales channel, 2013
- Face-to-face advice still important for consumers…
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- Figure 33: Sources of advice on life insurance policies, March 2014
- …but digital channels are likely to pick up
- A note on the new adviser model categories now in effect
Life Insurance Product Ownership
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- Key points
- Survey background
- One in five over-50s have whole-of-life cover
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- Figure 34: Life insurance product ownership, March 2014
- Over half of over-50s have no form of life cover
- More than one in 10 over-50s are unsure about their policy
- Affluence affects choice of whole-of-life cover
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- Figure 35: Life insurance product ownership, by household income, March 2014
- Women are less likely to own whole-of-life cover
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- Figure 36: Life insurance product ownership, by gender, March 2014
- Consumers tend to have one type of life insurance product
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- Figure 37: Number of life insurance products owned, March 2014
Life Cover Purchase Triggers
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- Key points
- Financial protection for family remains the principal trigger for life cover purchase…
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- Figure 38: Life cover purchase triggers, 2012 and 2014
- …followed by mortgage cover
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- Figure 39: Life insurance product ownership, by purchase triggers, March 2014
- Whole-of-life cover is largely triggered by funeral costs
- Financial situation influences motivation to purchase life cover
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- Figure 40: Life cover purchase triggers, by household income, March 2014
Factors Influencing Choice of Life Insurance Plan
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- Key points
- 31% of policyholders consider brand strength as important
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- Figure 41: Factors influencing choice of life insurance plan, March 2014
- Role of gifts and celebrity endorsement rank very low
- Nearly one in five value simplicity
- Low monthly premiums are most important factor for guaranteed acceptance plan holders
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- Figure 42: Factors influencing choice of life insurance plan, by life insurance product ownership, March 2014
- Recommendations are also highly influential
Reasons for Not Having Life Insurance
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- Key points
- 29% without life insurance have no debts to pay off
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- Figure 43: Reasons for not having life insurance, March 2014
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- Figure 44: Reasons for not having life insurance, by age, March 2014
- Some cannot afford life insurance
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- Figure 45: Over-50s who cannot afford to pay for life insurance, by age, March 2014
- One in five prefer saving than paying life insurance premiums…
- …and 17% claim to have made other plans
- Retaining access to their money is important to the over-50s
Consumer Awareness of Funeral Costs
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- Key points
- Nearly half believe funerals cost between £3,000 and £4,999…
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- Figure 46: Awareness of funeral costs, March 2014
- …while funeral costs can easily reach the higher ranges
- Rising funeral costs present an opportunity for over-50s plans…
- …but also a major challenge
Financial Planning for Funeral Costs
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- Key points
- Just over one in four respondents are preparing financially for their funeral
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- Figure 47: Financial planning for funeral costs, March 2014
- Age impacts people’s saving towards funerals
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- Figure 48: Financial planning for funeral costs, by age, March 2014
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- Figure 49: Value of savings and investments, by age, January 2014
- Prepaid funeral plans stand as a rival to guaranteed acceptance plans
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- Figure 50: Life insurance product ownership, by financial planning for funeral costs, March 2014
Appendix – Market Size and Forecast
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- Figure 51: Best- and worst-case forecast for total value of new guaranteed acceptance plans, 2014-19
- Figure 52: Best- and worst-case forecast for total volume of new guaranteed acceptance plans, 2014-19
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Appendix – Channels to Market
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- Figure 53: Sources of advice on life insurance policies, by demographics, March 2014
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- Figure 54: Sources of advice on life insurance policies, by demographics, March 2014 (continued)
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- Figure 55: Sources of advice on life insurance policies, by demographics, March 2014 (continued)
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Appendix – Life Insurance Product Ownership
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- Figure 56: Life insurance product ownership, by demographics, March 2014
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- Figure 57: Life insurance product ownership, by demographics, March 2014 (continued)
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- Figure 58: Life insurance product ownership, by demographics, March 2014 (continued)
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- Figure 59: Number of life insurance product owned, by demographics, March 2014
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Appendix – Life Cover Purchase Triggers
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- Figure 60: Life cover purchase triggers, by demographics, March 2014
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- Figure 61: Life cover purchase triggers, by demographics, March 2014 (continued)
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Appendix – Factors Influencing Choice of Insurance Plan
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- Figure 62: Factors influencing choice of life insurance plan, by demographics, March 2014
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- Figure 63: Factors influencing choice of life insurance plan, by demographics, March 2014 (continued)
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Appendix – Reasons for Not Having Life Insurance
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- Figure 64: Reasons for not having life insurance, by demographics, March 2014
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- Figure 65: Reasons for not having life insurance, by demographics, March 2014 (continued)
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- Figure 66: Reasons for not having life insurance, by demographics, March 2014 (continued)
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Appendix – Consumer Awareness of Funeral Costs
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- Figure 67: Awareness of funeral costs, by demographics, March 2014
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- Figure 68: Awareness of funeral costs, by demographics, March 2014 (continued)
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Appendix – Financial Planning for Funeral Costs
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- Figure 69: Financial planning for funeral costs, by demographics, March 2014
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