Table of Contents
Executive Summary
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- The market
- Income protection sales are set to increase, but the market value remains steady
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- Figure 1: New individual (long-term) income protection sales and average premium, 2014-18
- Value of new income protection contracts forecast to grow year on year
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- Figure 2: Forecast of new individual (long-term) income protection premiums – Fan chart, 2013-23
- Independent advice accounts for 60% of new sales
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- Figure 3: Distribution of new individual (long-term) income protection premiums and contracts, by channel, 2014-18
- Almost half have less than £5,000 saved
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- Figure 4: Level of savings and investments, excluding main home and pension savings, December 2018
- Companies and brands
- Aviva leads the way in the income protection market…
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- Figure 5: Estimated market shares of the top five providers of new individual income protection, based on volume sales, 2017
- …and is also looking to target renters
- ABI and Holloway Friendly are raising awareness of financial vulnerability
- The consumer
- Only 7% own an income protection product
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- Figure 6: Protection product ownership, December 2018
- 60% would struggle with a loss of income within six months
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- Figure 7: Expected impact of loss of income on financial stability, December 2018
- 41% expect to rely upon statutory sick pay
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- Figure 8: Awareness of employer sick pay policies, December 2018
- Half take employers’ sickness policy into account when changing jobs
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- Figure 9: Attitudes towards employment sick pay policies, December 2018
- Over half are interested in a faster application process
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- Figure 10: Attitudes towards income protection, December 2018
- Similar levels of interest in life insurance and income protection
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- Figure 11: Interest in protection products, December 2018
- 52% are interested in extra medical health benefits
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- Figure 12: Interest in extra income protection benefits, December 2018
- What we think
Issues and Insights
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- Expand the reach of income protection to increase ownership
- The facts
- The implications
- Educate consumers on the dangers of relying on an employer’s sickness policy
- The facts
- The implications
The Market – What You Need to Know
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- Income protection sales increase, but average premiums are falling
- Independent advice accounts for 60% of new sales
- Almost half have less than £5,000 saved
- Loans for first-time buyers and home movers decline in 2018
- ‘Good Work Plan’ will make employees more aware of their sickness policy
Market Size and Forecast
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- Number of new sales set to increase for the fourth year in a row
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- Figure 13: New individual (long-term) income protection sales and average premium, 2014-18
- Strong performance for group income protection sales in 2018
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- Figure 14: Volume and value of new group (long-term) income protection sales, 2014-18
- Market Forecast
- Value of new income protection contracts forecast to grow year on year
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- Figure 15: Forecast of new individual (long-term) income protection premiums – Fan chart, 2013-23
- Figure 16: Forecast of new individual (long-term) income protection premiums, 2013-23
- Forecast methodology
Channels to Market
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- Independent advice remains the main route to market…
- …but non-advised sales are on the rise
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- Figure 17: Distribution of new individual (long-term) income protection premiums and contracts, by channel, 2014-18
- Bancassurance accounts for just under half of the non-advised market
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- Figure 18: Distribution of new individual (long-term) bancassurance income protection premiums, by channel, 2014-18
Market Drivers
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- Almost half have less than £5,000 saved
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- Figure 19: Level of savings and investments, excluding main home and pension savings, December 2018
- Number of first-time buyers and home movers declined in 2018
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- Figure 20: Volume of house purchase loans, by type of borrower, 2012-18
- Earnings growth overtakes inflation…
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- Figure 21: Average weekly earnings growth vs inflation, November 2008-November 2018
- …but over 50% are concerned about the effect of Brexit on the cost of living
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- Figure 22: Attitudes towards the effect of Brexit on the cost of living, July 2016-November 2018
- Self-employed workers are rapidly rising
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- Figure 23: Employment trends, by working status, 2000-18
- One in five policies sold in 2018 were on a short-term basis
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- Figure 24: Income protection policies, by benefit term, 2018
Regulatory and Legislative Changes
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- ‘Good Work Plan’ will clarify employees’ sick pay policy
- Mortgage-specific payments will not affect means-tested benefits
- MPs discuss need for income protection
Companies and Brands – What You Need to Know
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- Aviva is the largest provider in the income protection market…
- …and is also looking to target renters
- ABI and Holloway Friendly are raising awareness of financial vulnerability
Market Share
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- Aviva tops the list in 2017
- Smaller providers are gaining ground
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- Figure 25: Estimated market shares of the top five providers of new individual income protection, based on volume sales, 2017
Company Profiles
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- Aviva
- Recent performance and developments
- LV=
- Recent performance and developments
- Legal & General
- Recent performance and developments
- Royal London
- Recent performance and developments
- The Exeter
- Recent performance and developments
Launch Activity and Innovation
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- Zurich releases new policy with a lump-sum payment option
- ABI and Holloway Friendly are raising awareness of financial vulnerability
- Canada Life revamps its employee benefits
- RedArc Nurses introduces a mental health app for insurers
- Aventus is looking to speed up the insurance buying process
The Consumer – What You Need to Know
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- Just 7% own income protection
- 60% would struggle within six months with a loss of income
- Half consider sickness policy when changing jobs
- Over half are interested in a faster application process
- Similar levels of interest in life insurance and income protection
- 52% are interested in extra medical health benefits
Protection Product Ownership
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- Less than one in 10 own income protection
- Income protection needs to adapt to reach a wider audience
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- Figure 26: Protection product ownership, December 2018
- Dual-parent families are the most likely to have a policy
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- Figure 27: Ownership of income protection products, by lifestage, December 2018
Expected Impact of Loss of Income on Financial Stability
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- Majority would struggle within 12 months
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- Figure 28: Expected impact of loss of income on financial stability, December 2018
- A significant minority are overly optimistic about their financial resilience
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- Figure 29: Expected impact of loss of income on financial stability, by value of savings and investments, December 2018
- Renters highly likely to be in trouble within six months
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- Figure 30: Expected impact of loss of income on financial stability, by housing situation, December 2018
Awareness of Employer Sickness Policies
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- 41% are reliant upon statutory sick pay
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- Figure 31: Awareness of employer sick pay policies, December 2018
- Lack of awareness and ownership among those most in need
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- Figure 32: Awareness of employer sick pay policies, by ownership of income protection and accident or sickness cover, December 2018
Attitudes towards Employment Sickness Policies
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- 50% consider sickness policy when changing jobs
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- Figure 33: Attitudes towards employment sick pay policies, December 2018
- Greater understanding will lead to increased ownership
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- Figure 34: Agreement with the statement ‘I fully understand my employer’s sickness policy’, by ownership of income protection or accident or sickness cover, December 2018
Attitudes towards Income Protection
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- A faster application process could convince over 50%
- Case Study: Anorak is using Open Banking to provide life insurance
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- Figure 35: Attitudes towards income protection, December 2018
- Awareness of income protection cover is still an issue
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- Figure 36: Response to the statement “I find income protection hard to understand”, by expected impact of loss of income on financial stability, December 2018
- Self-employed more likely to identify need for cover
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- Figure 37: Response to the statement “I am confident that I do not need a protection policy’, by employment status, December 2018
Interest in Protection Products
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- Little difference when it comes to interest in life insurance and income protection
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- Figure 38: Interest in protection products, December 2018
- Less than one in five one-person households are interested in income protection
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- Figure 39: Interest in income protection, by lifestage, December 2018
Interest in Extra Income Protection Benefits
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- Over half would like extra medical health benefits
- Support for mental health offers a point of differentiation
- 36% are interested in rewards for a healthy lifestyle
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- Figure 40: Interest in extra income protection benefits, December 2018
Appendix – Data Sources, Abbreviations and Supporting Information
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- Product definitions
- Income protection
- Accident, sickness and unemployment (ASU) insurance
- Personal accident and sickness insurance
- Unemployment cover
- Personal accident insurance
- Mortgage payment protection insurance (MPPI)
- Critical illness cover
- Life insurance
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 41: Forecast of new individual (long-term) income protection premiums, at current and constant prices, 2018-23
- Forecast methodology
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