Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Premiums rise by 2% in 2016
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- Figure 1: New individual term assurance sales and average annual premium, 2012-16
- Term assurance market forecast to grow
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- Figure 2: Forecast of new individual term assurance contracts – Fan chart, 2012-22
- Figure 3: Forecast of new term assurance premiums – Fan chart, 2012-22
- Non-advised protection sales grow
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- Figure 4: Share of new term assurance business (contracts), by channel, 2016
- Over half have less than £5,000 in savings and investments
- Companies and brands
- Legal & General remains the largest life insurer, despite M&A activity
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- Figure 5: Top five providers of individual term assurance, by sales volumes, 2015 and 2016
- Investing in technology is a strategic priority
- Prevention rather than payouts
- Life assurance advertising spend grows by 5%
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- Figure 6: Total above-the-line, online display and direct mail advertising expenditure on life protection (including term assurance), 2012/13-2016/17
- The consumer
- Less than a third hold life insurance
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- Figure 7: Insurance product ownership, April 2017
- Term assurance is the most commonly held type of policy
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- Figure 8: Type of life insurance product(s) owned, April 2017
- Low levels of cross-selling in the life insurance market
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- Figure 9: Other products held with life insurance provider, April 2017
- Price comparison websites used as a benchmark for costs
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- Figure 10: Sources when looking for information on a new or existing life insurance policy, April 2017
- Cash benefits attract most interest
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- Figure 11: Interest in additional life insurance benefits, April 2017
- Short-term goals take financial priority over life insurance
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- Figure 12: Current financial priorities, April 2017
- Only a quarter would be willing to share their data
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- Figure 13: Interest in data sharing to influence the cost of life insurance premiums, April 2017
- What we think
Issues and Insights
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- Growth of non-advised sales could affect cover levels
- The facts
- The implications
- Cost-saving factor is key when deciding to share data
- The facts
- The implications
- Younger consumers more likely to be interested in healthy living benefits
- The facts
- The implications
The Market – What You Need to Know
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- Premiums rise by 2% in 2016
- Term assurance market forecast to grow
- Non-advised protection sales grow
- Over half have less than £5,000 in savings and investments
Market Size and Forecast
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- Market returns to growth
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- Figure 14: New individual term assurance sales and average annual premium, 2012-16
- Number of in-force policies falls for the fourth time in 2015
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- Figure 15: Number of individual term and whole-of-life assurance policies in force, 2008-15
- Market forecast
- Term assurance market forecast to grow
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- Figure 16: Forecast of new individual term assurance contracts – Fan chart, 2012-22
- Figure 17: Forecast of new individual term assurance contracts – Fan chart, 2012-22
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- Figure 18: Forecast of new term assurance premiums – Fan chart, 2012-22
- Figure 19: Forecast of new term assurance premiums, 2012-22
- Forecast methodology
Market Segmentation
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- Protection term assurance accounts for 65% of new contracts
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- Figure 20: Volume of new individual regular-premium term assurance policy sales, by policy type, 2012-16
- Mortgage term policies cover higher values
- Protection term policies are mostly level cover
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- Figure 21: Summary of new term assurance business, by type of policy, 2016
- Critical illness cross-selling rates are higher for mortgage term assurance
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- Figure 22: Critical illness rider benefits as a proportion of new individual term assurance business and new standalone critical illness business, 2012-16
Channels to Market
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- Mortgage term market moving away from advice
- Has the decline in bancassurance sales stopped?
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- Figure 23: Distribution of new mortgage term assurance business, by channel, 2015 and 2016
- Independent advice more prominent in protection sales
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- Figure 24: Distribution of new protection term assurance business, by channel, 2015 and 2016
- Non-advised protection sales grow
Market Drivers
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- Over half have less than £5,000 in savings and investments
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- Figure 25: Value of savings and investments, April 2017
- Growth in FTB mortgagers presents opportunities for sales
- Brexit will impact demand for cover
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- Figure 26: Volume of new mortgages, by purpose, not seasonally adjusted, 2012-16
- Claims paid transparency will give people confidence
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- Figure 27: Number of claims and claims paid for term assurance policies, 2014-16
Companies and Brands – What You Need to Know
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- Legal & General remains the largest life insurer, despite M&A activity
- Investing in technology is a strategic priority
- Prevention rather than payouts
- Life assurance advertising spend grows by 5%
Market Share
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- Legal & General remains the largest life insurer, despite M&A activity
- Royal London sales set to continue rising
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- Figure 28: Top five providers of individual term assurance, by sales volumes, 2015 and 2016
Competitive Strategies
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- Investing in technology
- Aviva merges businesses to focus on online
- Robo life insurance
- Instant term assurance
- Let me take a selfie
- People-first policies
- Tailored policies serve the under-served
- Prevention rather than payouts
Advertising and Marketing Activity
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- Life assurance advertising spend grows by 5%
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- Figure 29: Total above-the-line, online display and direct mail advertising expenditure on life assurance products, 2012/13-2016/17
- Specialist providers are the biggest spenders
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- Figure 30: Top 10 advertisers of (term) life insurance, 2015/16 and 2016/17
- Vitality focusses on health and wellbeing
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- Figure 31: Vitality focusses on health and wellbeing with Ambassadors Joe Root, Maro Itoje, Ellie Simmonds and Jessica Ennis-Hill
- TV advertising attracts highest proportion of spend
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- Figure 32: Proportional distribution of (term) life advertising expenditure, by media type, 2015/16 and 2016/17
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Less than a third hold life insurance
- Low levels of cross-selling in the life insurance market
- Price comparison websites used as a benchmark for costs
- Cash benefits attract most interest
- Short-term goals take financial priority over life insurance
- Only a quarter would be willing to share their data
Insurance Product Ownership
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- Less than a third hold life insurance
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- Figure 33: Insurance product ownership, April 2017
- 45-54-year-olds most likely to hold life insurance…
- …but there are opportunities to increase cover among younger groups
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- Figure 34: Life insurance ownership, by age, April 2017
- Opportunities to extend cover among women
- Private renters are least likely to have cover
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- Figure 35: Life insurance ownership, by housing situation, April 2017
- No cover and no savings
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- Figure 36: Value of savings and investments, by life insurance ownership, April 2017
Type of Life Insurance
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- Term assurance is the most popular form of life insurance
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- Figure 37: Type of life insurance product(s) owned, April 2017
Cross-selling in the Life Insurance Market
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- Low levels of cross-selling in the life insurance market
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- Figure 38: Other products held with life insurance provider, April 2017
- Convenience drives cross-selling among 18-44-year-olds
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- Figure 39: Other products held with life insurance provider, April 2017
- 7% hold critical illness with another provider
Researching Life Insurance
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- Price comparison websites used as a benchmark for costs
- Open banking could provide opportunities for protection market
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- Figure 40: Sources when looking for information on a new or existing life insurance policy, April 2017
- People without cover will appreciate face-to-face contact
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- Figure 41: Sources when looking for information on a new or existing life insurance policy, by life insurance ownership, April 2017
Life Insurance Benefits
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- Cash benefits attract most interest
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- Figure 42: Interest in additional life insurance benefits, April 2017
- Young people more likely to engage insurers with their lifestyle goals
- Aligning goals will lead to higher levels of retention
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- Figure 43: Interest in additional life insurance benefits, by age, April 2017
- Choice of benefits is important
Financial Priorities
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- Short-term benefits take financial priority
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- Figure 44: Current financial priorities, April 2017
- Only a quarter of parents prioritise ensuring financial security for their family
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- Figure 45: Current financial priorities, by parental status of children living in the household, April 2017
- People have other ways of ensuring financial security
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- Figure 46: Current financial priorities, by life insurance ownership, April 2017
- Flexible policies are key for potential movers
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- Figure 47: Current financial priorities, by type of life insurance owned, April 2017
Data Sharing with Life Insurance Providers
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- Only a quarter would be willing to share their data
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- Figure 48: Interest in data sharing to influence the cost of life insurance premiums, April 2017
- Insurers need to be transparent about the use and security of data
- 18-34-year-olds most interested in sharing their data
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- Figure 49: Interest in data sharing to influence the cost of life insurance premiums, by age, April 2017
- Existing policyholders more likely to be interested
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- Figure 50: Interest in data sharing to influence the cost of life insurance premiums, by life insurance product ownership, April 2017
- Half of term assurance holders are interested
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- Figure 51: Interest in data sharing to influence the cost of life insurance premiums, by type of life insurance owned, April 2017
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 52: Additional best- and worst-case forecast table for term assurance premiums, 2017-22
- Figure 53: Additional best- and worst-case forecast table for term assurance volume sales, 2017-22
- Forecast methodology
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