Table of Contents
Executive Summary
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- The market
- Term assurance sales dip in 2013
- Slow premium growth predicted for the term assurance market
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- Figure 1: Forecast of total new individual term assurance premiums, at current prices – fan chart, 2009-19
- Market factors
- Improving housing market yet to benefit the term assurance market
- Regulation has slowed advised sales
- Company, brands and innovation
- Legal & General leads the market
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- Figure 2: Top five individual term assurance providers, by sales volumes, 2013
- Little innovation in the term assurance market
- Adspend increased by 52% in the 12 month to May 2014
- Only around a tenth of term assurance sales non-advised in 2013
- The consumer
- A quarter of consumers own term life insurance
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- Figure 3: Ownership of life insurance products, May 2014
- The majority of life insurance policies are purchased with advice
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- Figure 4: Sources consulted when purchasing a life insurance policy, May 2014
- The majority of consumers are positive about the application process
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- Figure 5: Ways of arranging term assurance, May 2014
- Starting a family is the main trigger for taking out life insurance
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- Figure 6: Triggers for arranging life insurance, May 2014
- Consumers are aware of the importance of owning life insurance, but often fail to purchase
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- Figure 7: Attitudes towards life insurance, May 2014
- What we think
Issues and Insights
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- Direct-to-consumer channels will become increasingly important for providers
- The facts
- The implications
- Consumers require financial education in order to close the protection gap
- The facts
- The implications
Trend Application
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- Term assurance providers should illustrate the dangers of not having life protection
- Quick quotes for simple policies
- Engaging with consumers early to help them lock-in low premiums
Market Drivers
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- Key points
- The improved economic outlook should benefit the term assurance market
- Increasing number of housing transactions has failed to boost the term assurance market
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- Figure 8: Number of UK residential property transactions with a value of £40,000 upwards – seasonally adjusted, Q1 2007-Q1 2014
- More first-time buyers presents opportunities for the term assurance market
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- Figure 9: Number of loans for house purchase, by type of borrower, 2007-13
- Term assurance and whole of life policies dominate the protection market
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- Figure 10: Number of individual protection policies in force, by type, 2011-12
- Term assurance policies are almost guaranteed to pay out claims
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- Figure 11: Number of claims paid out across the protection industry, 2013
- Regulation and legislation
- Gender directive distorts sales figures in the life insurance industry
- Introduction of MMR will mean that mortgage advisers are short of time
- The introduction of the RDR has resulted in a reduction of bancassurance sales
- Solvency II Directive continues to be delayed
Who’s Innovating?
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- Key points
- A lack of innovation in the term assurance market
- Zurich launches Investment Life Cover for investments held on its platform
- Ageas launches relevant life insurance product
Market Size and Forecast
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- Key points
- The value of term assurance premiums decreased by 14% in 2013
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- Figure 12: New individual term assurance sales and average annual premium, 2009-13
- Number of mortgage term assurance sales decreases by 11% in 2013
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- Figure 13: Volume of new individual regular-premium term assurance policy sales, by policy type, 2009-13
- The average cost of protection term assurance continues to decrease
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- Figure 14: Average new premium – mortgage term assurance vs protection term assurance, 2009-13
- Market forecast
- Slow premium growth predicted for the term assurance market
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- Figure 15: Forecast of total new term assurance premiums, at current prices – Fan chart 2009-19
- Figure 16: Forecast of new individual term assurance premiums, at current and constant prices, 2009-19
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Legal & General remains the largest term assurance provider
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- Figure 17: Top five individual term assurance providers, by sales volumes, 2011-13
Companies and Products
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- Ageas
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- Figure 18: Key financial data for Ageas, 2012-13
- Aviva
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- Figure 19: Key financial data for Aviva plc, 2012-13
- Friends Life
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- Figure 20: Key financial data for Friends Life, 2012-13
- Legal & General
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- Figure 21: Key financial data for Legal & General, 2012-13
- Scottish Widows
Brand Communication and Promotion
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- Key points
- Adspend increased by 52% in the 12 months to May 2014
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- Figure 22: Total advertising expenditure on life products, by product category, 2011/12- 2013/14
- Smart Insurance continues to top adspend with TV campaign
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- Figure 23: Top ten advertisers of (Term) life insurance products, 2011/12-2013/14
- TV adspend doubles as providers look to boost product awareness
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- Figure 24: Advertising expenditure on (term) life insurance products, by media type, 2011/12-2013/14
- A note on adspend
Channels to Market
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- Key points
- Changes to ABI categories explained
- Only around a tenth of term assurance sales were non-advised in 2013
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- Figure 25: Mortgage and protection term assurance premiums, by distribution channel, 2013
- Intermediaries are the most significant channel for term assurance sales
- Bancassurance term assurance sales suffer
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- Figure 26: Mortgage term assurance and protection term assurance bancassurance premiums, 2009-13
Ownership of Life Insurance Products
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- Key points
- A quarter of consumers own term life insurance
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- Figure 27: Ownership of life insurance products, May 2014
- Awareness of life insurance products can be improved
- Consumers with higher household incomes are more likely to own life insurance
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- Figure 28: Ownership of life insurance, by gross annual household income, May 2014
- Consumers who rent are less likely to have life insurance
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- Figure 29: 30: Ownership of life insurance, by housing situation and presence of own children, May 2014
Sources Consulted when Purchasing Life Insurance
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- Key points
- The majority of life insurance policies are purchased with advice
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- Figure 31: Sources consulted when purchasing a life insurance policy, May 2014
- Around a third of consumers consulted with bank advisers
- Under-35s more inclined to use online sources to find term assurance cover
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- Figure 32: Sources consulted when purchasing life insurance, by age, May 2014
Arranging Term Assurance
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- Key points
- The majority of consumers are positive about the application process
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- Figure 33: Arranging term assurance, May 2014
- A quarter of consumers don’t find policy documents easy to understand
- Consumers want quality of cover as well as low cost
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- Figure 34: Arranging term assurance, by Ownership of Life Insurance Products, May 2014
- Under-35s are more likely to use online tools to arrange life insurance
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- Figure 35: Arranging term assurance, by age, May 2014
- Only a quarter of consumers chose to write their plan in trust
- Aggregators are well suited to selling simple products
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- Figure 36: Ways of arranging term assurance, by sources consulted when purchasing life insurance, May 2014
Triggers for Arranging Life Insurance
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- Key points
- Starting a family is a major trigger for taking out life insurance
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- Figure 37: Triggers for Arranging life insurance, May 2014
- Under-25s could be educated on how life insurance works
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- Figure 38: Triggers for arranging life insurance, by age, May 2014
- Consumers claim an increase in income would increase consideration of life insurance
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- Figure 39: Triggers for arranging life insurance, by socio-economic group and current financial situation, May 2014
Amount Prepared to Pay for Life Insurance
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- Key points
- The maximum the majority would pay for term assurance is £10-£15 per month
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- Figure 40: Amount prepared to pay for life insurance, May 2014
- Average premiums are higher than most consumers would be prepared to pay
Attitudes towards Life Insurance
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- Key points
- Consumers are aware of the benefits of owning life insurance, but often fail to purchase it
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- Figure 41: Attitudes towards life insurance, May 2014
- Under-25s have a lower awareness of the benefits of life insurance
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- Figure 42: Attitudes towards life insurance, by age, May 2014
- Parenthood changes how consumers perceive of life insurance
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- Figure 43: Attitudes towards life insurance, by presence of children, May 2014
- Home ownership stops consumers from thinking life insurance is a luxury product
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- Figure 44: Attitudes towards life insurance, by housing situation, May 2014
Appendix – Market Size and Forecast
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- Figure 45: Forecast for new individual term assurance premiums – best- and worst-case scenarios, at current prices, 2014-19
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Appendix – Ownership of Life Assurance
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- Figure 46: Most popular ownership of life insurance, by demographics, May 2014
- Figure 47: Next most popular ownership of life insurance, by demographics, May 2014
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Appendix – Sources Consulted when Purchasing Life Insurance
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- Figure 48: Most popular sources consulted, by demographics, May 2014
- Figure 49: Next most popular sources consulted, by demographics, May 2014
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- Figure 50: Other sources consulted, by demographics, May 2014
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Appendix – Arranging Term Assurance
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- Figure 51: Arranging term assurance – I chose my policy because it gave me the best level of cover I can afford, by demographics, May 2014
- Figure 52: Ways of arranging term assurance – I found the application process easy when purchasing my policy, by demographics, May 2014
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- Figure 53: Ways of arranging term assurance – I found the policy documents easy to understand, by demographics, May 2014
- Figure 54: Ways of arranging term assurance – I compared several different companies before I chose my provider, by demographics, May 2014
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- Figure 55: Ways of arranging term assurance – I chose to purchase my policy from a company that has a good reputation for paying out on claims, by demographics, May 2014
- Figure 56: Ways of arranging term assurance – I chose to use a company that I had used before, by demographics, May 2014
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- Figure 57: Ways of arranging term assurance – I chose my policy because it was the lowest quote, by demographics, May 2014
- Figure 58: Ways of arranging term assurance – I checked online customer reviews before I chose my provider, by demographics, May 2014
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- Figure 59: Ways of arranging term assurance – I found it difficult to choose between providers, by demographics, May 2014
- Figure 60: Ways of arranging term assurance – I chose to place my policy in a trust so I don’t have to pay inheritance tax, by demographics, May 2014
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- Figure 61: Arranging term assurance, by sources consulted when purchasing life insurance, May 2014
- Figure 62: Arranging term assurance, by sources consulted when purchasing life insurance, May 2014 (continued)
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Appendix – Triggers for Arranging Life Insurance
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- Figure 63: Most popular term assurance motivators, by demographics, May 2014
- Figure 64: Next most popular term assurance motivators, by demographics, May 2014
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Appendix – Amount Prepared to Pay for Life Insurance
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- Figure 65: Maximum price non-customers would be willing to pay for life insurance, by demographics, May 2014
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Appendix – Attitudes towards Life Insurance
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- Figure 66: Agreement with the statement ‘People with dependents should have life insurance’, by demographics, May 2014
- Figure 67: Agreement with the statement ‘Life insurance provides peace of mind’, by demographics, May 2014
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- Figure 68: Agreement with the statement ‘It’s better to arrange life insurance when you are young’, by demographics, May 2014
- Figure 69: Agreement with the statement ‘Life insurance is too expensive if you have pre-existing medical conditions’, by demographics, May 2014
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- Figure 70: Agreement with the statement ‘I don’t want to think about needing life insurance’, by demographics, May 2014
- Figure 71: Agreement with the statement ‘Life insurance is a luxury product, rather than an essential’, by demographics, May 2014
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- Figure 72: Agreement with the statement ‘Having life insurance is more important than covering your personal belongings’, by demographics, May 2014
- Figure 73: Agreement with the statement ‘Life insurance companies can be trusted to act in their customers’ best interests’, by demographics, May 2014
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- Figure 74: Agreement with the statement ‘If you’re fit and healthy you shouldn’t need life insurance’, by demographics, May 2014
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