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UK Protection Insurance 2018: Term and Whole of Life

The UK life protection insurance market for regular individual premiums grew in 2017, driven by growth of the term assurance market despite the whole-of-life market declining. Term market growth was primarily due to increased sales of non-mortgage term assurance policies by independent financial advisors, although sales in the direct channel are also increasing, reflecting demand to purchase life insurance online. Underwritten whole-of-life policies continue to be sold by independent advisors, while guaranteed acceptance over-50s products are sold direct without advice. Inheritance tax liability is seen as an opportunity to sell whole-of-life cover, with some insurers launching targeted advisor-sold policies to capitalize upon this.

This report discusses the term assurance and whole-of-life insurance markets, looking at market size with regards to changes in contracts and premiums. The scope of this report covers the market for individual regular premiums only, concentrating on the main market for all types of consumers seeking their own cover. It highlights how products are distributed, and the main market players and their propositions. It provides five-year forecasts of market size in premiums to 2022, and discusses how the market, distribution, and products offered are likely to change in future.


– Total protection premiums reached £728.7m in 2017, exhibiting growth of 8.4% for the year. Term premiums reached £540.8m following 13.5% year-on-year growth to 2017, whereas whole-of-life premiums shrank by 1.8% to £96.3m.

– The protection market is dominated by a few key players. Legal & General holds the largest share of the term market (32.6%), whereas SunLife holds the largest proportion of the whole-of-life market (39.1%).

Reasons to Buy

– Understand the future of life insurance products and the services that are vital to implement. This includes engaging in health and wellbeing, personalizing policies, providing customers with rewards and benefits, and improving underwriting and claims processes.

Key Players

Legal & General


Royal London


Friends Life


Scottish Friendly






Munich Re





British Friendly


AIG Life

Scottish Widows

Haven Life


Health I.Q

Bought By Many

Table of Contents

Table of Contents


1.1. Market summary 2

1.2. Key findings 2

1.3. Critical success factors 2


2.1. Introduction 8

2.2. The protection market saw growth in 2017 9

2.2.1. The UK protection market grew in 2017, following three years of stagnation since the RDR 9

2.2.2. Term products dominate the protection market 10

2.3. The term market dictates the performance of the total protection market 11

2.3.1. The term market recorded

13.5% growth in new business premiums in 2017 11

2.3.2. Term assurance rates are falling due to competition and simplified distribution 12

2.3.3. 14.2% of non-mortgage related contracts may have been purchased to protect a mortgage 12

2.3.4. Growth in mortgage lending is an opportunity for term policy providers 12

2.3.5. The opportunity is ripe for targeting first-time buyers with term assurance 13

2.3.6. Automation is making selling protection alongside a mortgage easier 14

2.4. Whole-of-life is a market of two halves 15

2.4.1. The whole-of-life market continued to decline in 2017 but at a slower rate 15

2.4.2. The guaranteed acceptance market has been propped up by rate increases 16

2.4.3. Fewer underwritten policies are being sold with critical illness insurance as a rider 16


3.1. Growth of the total protection market is mostly down to IFAs 17

3.1.1. Growth of the protection market is attributed to the independent advice channel 17

3.1.2. The independent advice channel accounted for nearly half of new contracts in 2017 17

3.1.3. 12.0% of mortgage-related term assurance policies are sold via banks 18

3.2. Term products are still dominated by IFAs 19

3.2.1. The independent and non-advised channel grew in 2017 while the restricted channel declined 19

3.2.2. The independent advice channel grew significantly for term assurance in 2017 19

3.3. Distribution of whole-of-life products is as divided as ever 20

3.3.1. The majority of guaranteed acceptance products are sold without advice 20

3.3.2. Underwritten whole-of-life policies are complex and so are distributed through IFAs 21

3.3.3. Increasing inheritance tax liability is creating an opportunity for the whole-of-life market 22

3.3.4. The government has announced a review of inheritance tax in order to reduce complexity 22


4.1. Competitive advantage will be gained through innovation 23

4.1.1. Competition in the life insurance market is focused on innovation and distribution 23

4.1.2. Insurers fear the GDPR being a barrier to innovation and product marketing 23

4.2. The life insurance market is dominated by a few key players 23

4.2.1. Legal & General dominates the individual term assurance market 23

4.2.2. SunLife holds the largest share of the whole-of-life market 24

4.3. Legal & General attracts customers with retail gift cards 24

4.3.1. Legal & General has a calculator tool for customers purchasing directly online 24

4.3.2. Legal & General offers a standard term assurance policy and a mortgage-linked policy 25

4.3.3. Legal & General’s over-50s plan has an option to add an extra £300 towards funeral costs 25

4.3.4. Legal & General offers retail gift cards for purchasing life insurance 26

4.4. Aviva has additional life cover that is only sold through advisors 26

4.4.1. Aviva allows customers to purchase standard policies directly online 26

4.4.2. Aviva’s standard term assurance has an optional separation benefit 26

4.4.3. Life insurance+ provides enhanced cover options for those adding on critical illness 27

4.4.4. Aviva doubles the payout of its over-50s policy if death is caused by an accident a year after policy purchase 27

4.4.5. Aviva recently launched a whole-of-life+ policy for high-value clients at risk of inheritance tax 27

4.4.6. Aviva has purchased Irish insurer Friends First 28

4.5. SunLife is marketed towards the over-50s 28

4.5.1. SunLife offers term family life insurance and an over-50s policy 28

4.5.2. SunLife term assurance is underwritten by Royal London 28

4.5.3. SunLife provides funeral planning and calculator tools alongside its over-50s policy 28

4.6. Vitality rewards healthy customers with discounts 29

4.6.1. Vitality uses rewards and discounts to encourage healthy behavior 29

4.6.2. Vitality uses marketing and partnerships to increase engagement with health and its brand 29


5.1. The life insurance market is forecast to exhibit slight growth 31

5.1.1. The term market will grow, while the whole-of-life market will contract by 2022 31

5.1.2. The term assurance market will grow due to innovations in products and distribution 31

5.1.3. The whole-of-life market is forecast to decline over the next five years 32

5.2. Life insurers seek to better understand their customers through data 33

5.2.1. Insurance will become personalized through the internet of things and focused on prevention 33

5.2.2. How and what data life insurers collect about their customers will evolve 33

5.2.3. Selfie underwriting is only being used for quick quotes 33

5.2.4. Genomic profiling could be used to assess risk in the future 34

5.2.5. The definition of customer risk is changing 34

5.3. Life insurers will engage in health and wellness 35

5.3.1. Life insurers will take an active role in preventing illness and injury 35

5.3.2. Data must be converted into meaningful insight for individuals 35

5.3.3. Life insurance providers are launching their own wellbeing apps 35

5.3.4. Providers are launching digital healthcare and virtual GP services 36

5.3.5. The range of added-value services will expand 37

5.3.6. Rewards and benefits are key to making protection seem a valuable purchase 37

5.3.7. Combined health and life insurance plans are being launched in India 38

5.4. Underwriting is becoming personalized 38

5.4.1. Insurers are refining traditional purchasing processes 38

5.4.2. Flexible policies will give customers more control of cover levels, duration, and affordability 39

5.4.3. Artificially intelligent robo-advisors have a future role in recommending cover 39

5.4.4. Cover could change in real-time if customers are monitored continuously 39

5.4.5. Life insurers are developing specialist policies for groups of consumers 40

5.5. Claims services must use technology to increase efficiency 41

5.5.1. Claims efficiency is important, with some already being paid within one day 41

5.5.2. Insurers should help customers plan for end of life 41


6.1. Abbreviations and acronyms 42

6.2. Definitions 42

6.3. Forecasting methodology 43

6.4. Bibliography 43

6.5. Further reading 44

List of Figures

List of Figures

Figure 1: The UK protection market grew by 9.0% in contracts and 8.4% in premiums year-on-year to 2017 9

Figure 2: Non-mortgage related term assurance products dominate the protection insurance market 10

Figure 3: Only mortgage term life with critical illness declined in contracts in 2017 11

Figure 4: Mortgage lending is forecast to continue growing, but at a slower rate over the next few years 13

Figure 5: First-time buyers have overtaken home movers in the number of loans made to home owners 14

Figure 6: Guaranteed acceptance policies make up the majority of whole-of-life market contracts 15

Figure 7: Advisors are key to the distribution of protection products 18

Figure 8: Banks left the market following the RDR, with guaranteed acceptance products being the worst hit 19

Figure 9: The non-advised channel is also growing, highlighting that consumers are willing buy term assurance independently 20

Figure 10: Whole-of-life underwritten policies are sold through IFAs, but guaranteed acceptance cover is sold direct 21

Figure 11: Legal & General dominates the term market, while SunLife leads the way in whole-of-life 24

Figure 12: The life insurance market is forecast to grow by 2.4% from 2017 to 2022 32


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