UK Protection Insurance 2017: Term and Whole of Life

UK Protection Insurance 2017: Term and Whole of Life


"UK Protection Insurance 2017: Term and Whole of Life", covers the market for individual regular premiums, concentrating on the main market for all types of consumers seeking their own cover. Taking protection as a whole, it focuses on the major and closely related product lines of term and whole of life insurance that broadly provide financial compensation in the risk-measured event of death or severe health issues. The report examines the size of the protection market over time, and how the distribution landscape is changing and being impacted by technology and direct propositions. It discusses the top market players and their propositions. The report forecasts how the size of the market will change over the next five years, discusses consumer engagement with protection products, and highlights how providers propositions are likely to change in the future.

The UK life protection market for regular, individual premiums has entered a quiet period, with a new normal level of business of reduced contracts and premiums since 2013. With the protection market fairly stable in terms of premiums, the real story lies in changes in distribution. The non-advised channel is starting to gain momentum for term products that can be easily commoditized. Term distribution is expected to move away from independent financial advisors (IFAs) and begin to mirror the general insurance market, where policies are sold directly and through aggregators. Providers propositions are also changing. Policies are becoming more personalized to individual risk, with insurers developing policies for specific risk groups. Providers are also trying to actively help their customers manage their health.


- The protection market is dominated by a few key players. Legal & General holds the largest share of the term market, whereas SunLife holds the largest proportion of the whole of life market.
- Providers are trying to actively help their customers manage their health by investing in diagnostic healthcare technology, launching wellbeing apps, and providing customers with virtual GP services.
- Following the Retail Distribution Review, robo-advice and technology will help bridge the advice gap for less affluent consumers.

Reasons to buy

- Understand how customers perceive protection products and what can be done to make them more attractive.
- Remain competitive by discovering how providers are changing their propositions.
- Discover how technology and robo-advice are being used to simplify the distribution of protection products.
- See how the UK protection market is forecast to grow over the next five years.
Table of Contents
1.1. Protection has reached a new normal, but innovation is coming 3
1.2. Key findings 3
1.3. Critical success factors 3
2.1. Introduction 9
2.2. The protection market remained steady in 2016 10
2.2.1. The UK protection market has reached a new normal of lower business levels since the RDR 10
2.2.2. Term products dominate the protection market 11
2.3. The term market dictates the performance of the total protection market 12
2.3.1. The term market recorded slight growth of 2.0% following four years of decline 12
2.3.2. Growth in mortgage lending is an opportunity for term policy providers 14
2.3.3. But providers are finding it difficult to sell life insurance alongside a mortgage 15
2.3.4. Mortgage lending will begin to slow, reducing the opportunity for term products 15
2.4. Whole of life is a market of two halves 16
2.4.1. The whole of life market has returned to its decline after a year of growth 16
2.4.2. Whole of life premiums have been propped up by rate increases 16
3.1. The RDR changed the distribution landscape 19
3.1.1. The total protection market shows a decline in the restricted advice channel 19
3.2. Term products are still dominated by IFAs 20
3.2.1. The non-advised channel is making gains in the term market 20
3.2.2. Non-mortgage term products are driving changes in distribution in the term market 21
3.2.3. Distribution for mortgage-related term products remains fairly steady 21
3.2.4. Term products have the higher capacity to be commoditized and sold on a direct basis 22
3.3. Distribution of whole of life products is as divided as ever 23
3.3.1. The majority of guaranteed acceptance products are sold without advice 23
3.3.2. Underwritten whole of life policies are complex and so are distributed through IFAs 23
3.4. Technology is being used to improve the customer journey 24
3.4.1. Protection products are lacking in ease of purchase compared to other industries 24
3.4.2. Distribution will begin to echo the general insurance market as self-service will grow 24
3.4.3. To operate directly, customer journeys have started to be streamlined 25
3.4.4. Growth is predicted for life insurance aggregators 25
3.4.5. Robo-advice will fill the advice gap for the less affluent 26
3.4.6. Aviva has a calculator to help customers understand how much cover they need 27
3.4.7. Certua will launch a robo-life service where policies can be adapted to customer needs 27
3.4.8. NAB has a digital advice service to empower those without an IFA 28
3.4.9. Exaxe has launched a robo-advice platform 28
3.4.10. Legal & General is considering entering the robo-advice space 28
3.4.11. Royal London has launched machine learning mortgage protection 29
3.4.12. Concierge services could be adapted for the life insurance market 29
3.4.13. Artificial intelligence is being used to manage claims with greater efficiency 29
4.1. The life insurance market is dominated by a few key players 31
4.1.1. Legal & General dominates the individual term assurance market 31
4.1.2. SunLife holds the largest share of the whole of life market 31
4.1.3. Legal & General offers a range of life insurance policies 32
4.1.4. Aviva has a term assurance policy in addition to an over 50s life insurance policy 33
4.1.5. SunLife offers term family life insurance and an over 50s policy 34
4.1.6. Competitive advantage will be gained through innovative products and direct distribution 34
4.1.7. Vitality has brought innovation to the market by rewarding healthy customers 34
4.1.8. Virgin Money has partnered with BGL to launch a new life insurance product 35
4.1.9. Royal London partners with Post Office Money to launch new life insurance products 35
5.1. The protection market is forecast to remain steady 37
5.1.1. Distribution will have the largest impact on the protection market towards 2021 37
5.2. Customer engagement with protection policies could be improved 38
5.2.1. Uptake of life insurance could be increased 38
5.2.2. Life insurance policies should be framed differently 39
5.2.3. Protection insurance is still regarded as being too expensive 39
5.2.4. Providers need to be more empathetic with their customers 40
5.3. Protection products are becoming more personalized 40
5.3.1. Wearable healthcare technology will be able to assess the risk of particular individuals 40
5.3.2. Facial analytics has been developed to estimate life expectancy 40
5.3.3. Genomic profiling could be used to assess risk in the future 41
5.3.4. Personalization could create an uninsurable underclass 42
5.3.5. Royal London has launched a specialist policy for diabetics 42
5.3.6. Pulse Insurance launched cover for individuals with HIV 43
5.4. Providers want to help individuals manage their health 43
5.4.1. Providers could offer wearable technology that diagnoses and manages medical conditions 43
5.4.2. Aviva has invested in technology to detect early signs of cancer 44
5.4.3. Life insurance providers are launching their own wellbeing apps 44
5.4.4. Providers are launching digital healthcare and virtual GP services 44
6.1. Abbreviations and acronyms 46
6.2. Bibliography 46
6.3. Further reading 48

List Of Tables

Table 1: Total life protection market, regular premiums (000s), 2011-16 12

List Of Figures

Figure 1: The UK protection market has stabilized since the RDR, remaining fairly flat to 2016 10
Figure 2: The market for protection products has contracted 11
Figure 3: Term market premiums and contracts have grew slightly in 2016 13
Figure 4: Only mortgage term life with critical illness declined in 2016 14
Figure 5: Whole of life policies returned to decline in 2016 following a year of growth 17
Figure 6: Whole of life premiums have fallen below 2014 levels 18
Figure 7: The restricted advice channel has shrunk as a result of the RDR 20
Figure 8: The non-advised channel is growing, but IFAs still dominate the term market 22
Figure 9: Whole of life underwritten policies are sold through IFAs, but guaranteed acceptance policies are sold without advice 24
Figure 10: Avivas life insurance calculator provides an estimate of how much cover is required 27
Figure 11: Legal & General dominates the term market, while SunLife leads the way in whole of life 32
Figure 12: Vitality rewards customers leading an active lifestyle 35
Figure 13: The total protection market is forecast to be worth 579.7m in new premiums in 2021 38

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