Table of Contents
Overview
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- What you need to know
- Report scope and definitions
Executive Summary
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- The market
- 5% increase in policy sales in 2015
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- Figure 1: Forecast for total volume of new guaranteed acceptance plans, 2011-21
- Figure 2: Whole of life insurance policy sales, by product type, 2011-15
- Overall premiums have declined by a lower rate than the volume of sales
- Increase in non-advised sales in 2015
- Funeral costs continue to rise
- Companies and brands
- Market concentration has decreased, but SunLife Direct still dominates
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- Figure 3: Top five providers of guaranteed acceptance plan whole of life policies, 2015
- Sale of AXA SunLife leads to uncertainty
- The consumer
- A fifth have whole of life cover but there is confusion about policies held
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- Figure 4: Life insurance product ownership, April 2016
- Mixed reasons for taking out cover among guaranteed acceptance plan holders
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- Figure 5: Reasons for purchasing life insurance, April 2016
- Negative perceptions continue to undermine market
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- Figure 6: Consumer attitudes towards guaranteed acceptance policies, April 2016
- Free gifts do not resonate as much as product recommendations
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- Figure 7: Consumer reasons for selecting an insurance provider, April 2016
- What we think
Issues and Insights
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- Tackling issues of fairness and value could result in added complexity with over-50s life insurance market
- The facts
- The implications
- A focus on funeral costs could be limiting the reach of over-50s life insurance
- The facts
- The implications
The Market – What You Need to Know
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- The market saw growth in 2015 and is expected to continue growing
- Overall premiums have declined by a lower rate than the volume of sales
- Increase in non-advised sales in 2015
- Funeral costs continue to rise
- Target market set to increase
Market Size and Forecast
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- Sales rose in 2015…
- …after period of decline
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- Figure 8: Whole of life and guaranteed acceptance new contracts and premiums, 2011-15
- Guaranteed acceptance vs underwritten whole of life
- Guaranteed acceptance policies maintain dominance in terms of volume
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- Figure 9: New contract distribution, by product type, 2011-15
- Whole of life new premiums surpass guaranteed acceptance
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- Figure 10: Value of new whole of life and guaranteed acceptance premiums, 2011-15
Market Forecast
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- Guaranteed acceptance plan market set for growth
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- Figure 11: Forecast for total volume of new guaranteed acceptance plans, 2011-21
- Figure 12: Forecast for total volume of new guaranteed acceptance plans, 2011-21
- Figure 13: Forecast for total value of new guaranteed acceptance plans, 2011-21
- Figure 14: Forecast for total value of new guaranteed acceptance plans, 2011-21
- Forecast methodology
Channels to Market
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- Growth in underwritten whole of life non-advised sales
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- Figure 15: Whole of life and guaranteed acceptance sales channels, 2014 and 2015
- Advisers still have a place in the market
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- Figure 16: Consumers’ preferences when arranging life insurance, April 2016
- Online sales remain niche but with room to grow
Market Drivers
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- Target market for over-50s life insurance continues to grow
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- Figure 17: Population projections, 2016-40
- The cost of funerals continues to rise
- Prepaid funeral plans increase competition
- Financial security is mixed among over-50s
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- Figure 18: Consumers current financial situation, by age, April 2016
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- Figure 19: Value of savings and investments, by age (over-45s only), April 2016
- Repairing reputations to improve consumer perceptions
Regulatory and Legislative Changes
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- Inheritance tax changes to undermine underwritten whole of life sales…
- …but providers are looking to long-term care to reinvigorate the product
- Potential changes to funeral subsidies available from the government
- The Scottish burial and cremation bill
Key Players – What You Need to Know
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- Market concentration has decreased but SunLife Direct still dominates
- Proposed sale of SunLife to Phoenix Group
- Product developments focus on improving fairness
- Expanding the reach of whole of life policies
Market Share
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- Market concentration has decreased
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- Figure 20: Top five product providers, measured by new individual whole of life sales*, 2015
- SunLife dominates the market again…
- …although this could be about to change
Competitive Strategies
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- Royal London and British Seniors seek to address concerns about product fairness
- Driving premiums lower
- Insurers create strong relationships with well-known brands
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- Figure 21: Selected distributors and underwriters of guaranteed acceptance plans, as of May 2016
- Additional funeral benefits
- Engage Mutual becomes One Family following merger
- VitalityLife looking to expand reach of whole of life policies
Launch Activity and Innovation
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- Royal London – Flexible premiums and protected payout
- British Seniors – Lifetime Payback Guarantee
- SunLife introduces a premium cap
- VitalityLife launches an early-access whole of life policy…
- …and looks to make policies more affordable upfront
- AIG and Zurich also extend care cover to whole of life market
- Cigna launches partially underwritten over-50s plan to affinity market
- Promis Life launches a funeral plan
- LifeQuote adds whole of life comparison service
Advertising and Marketing Activity
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- Over-50s life insurance adspend increases in 2015/16
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- Figure 22: Total above-the-line, online display and direct mail advertising expenditure on life insurance products, 2013/14-2015/16
- SunLife continues to dominate over-50s life insurance adspend
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- Figure 23: Total above-the line, online display and direct mail advertising expenditure for top 10 advertisers of over-50s life insurance, 2013/14-2015/16
- Top four providers all increase adspend activity…
- …through different strategies
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- Figure 24: Total above-the line, online display and direct mail advertising expenditure of over-50s life insurance, by media type, 2015/16
- Other advertising activity
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- A fifth have whole of life cover but there is confusion about policies held
- Mixed reasons for taking out cover among guaranteed acceptance plan holders
- Free gifts do not resonate as much as product recommendations
- Negative perceptions continue to undermine market
- Short-term finances are a priority for lower income groups
Life Insurance Ownership
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- Nearly half of over-50s have life insurance…
- …but some are confused by what type of cover they hold
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- Figure 25: Life insurance product ownership, April 2016
- Competition with prepaid funeral plans
- Guaranteed acceptance ownership is higher among 55-74-year-olds
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- Figure 26: Product ownership, by age, April 2016
Reasons for Purchase
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- Mixed reasons for taking out whole of life insurance
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- Figure 27: Life insurance purchase triggers, by product ownership, April 2016
- More people taking out cover to pay for funeral…
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- Figure 28: Consumers’ reasons for purchasing life insurance, 2014 and 2016
- …and to leave a cash gift for loved ones
- Being able to cover the mortgage is a growing concern for over-50s
Factors Influencing Choice of Provider
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- Brand name/ familiarity is key to choice of provider
- Free gifts are not enough to entice customers
- Consumers value family and friends’ opinions
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- Figure 29: Factors influencing choice of provider, April 2016
Attitudes towards Over-50s Life Insurance
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- Negative publicity is still affecting the market…
- …although product developments are addressing some of the concerns
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- Figure 30: Consumer attitudes towards guaranteed acceptance policies, April 2016
- Fewer than one in ten intend to take out an over-50s policy
- Some have not heard about guaranteed acceptance policies
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- Figure 31: Consumers’ agreement with statements regarding guaranteed acceptance policies, by age, April 2016
Attitudes towards Planning for the Future
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- Leaving an inheritance is important to over-50s
- One in four over-50s think savings accounts are better than purchasing life insurance
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- Figure 32: Consumers’ attitudes towards planning for the future, April 2016
- Short-term finances are a priority for lower income groups
- Almost a fifth do not believe it is worth worrying about the future
Planning for Funeral Expenses
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- Nearly half will use savings and value of estate to pay for their funeral
- A fifth expect to use a life insurance plan
- No expectation that the state will pick up funeral costs
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- Figure 33: Funeral cost planning, April 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Best- and worst-case forecasts for guaranteed acceptance plans
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- Figure 34: Best- and worst-case forecast for total volume of new guaranteed acceptance plans, 2015-21
- Figure 35: Best- and worst-case forecast for total value of new guaranteed acceptance plans, 2015-21
- Forecast methodology
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