United Kingdom (UK) Term Assurance Distribution Dynamics by Channels and Future Market, 2023 Update

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This report explores how purchasing preferences have changed over time for term assurance. It discovers what is most influential to customers when purchasing a term assurance policy and reveals the most popular providers in the market. New trends and innovations are highlighted, as well as the key factors that will influence the term assurance insurance market over the next few years.

Insurers and brokers remained the top two channels, accounting for a combined share of 73.3% of non-mortgage-related purchases in 2023. Insurers’ share increased minimally by just 0.1 percentage points (pp) from 2022 to 2023. 45.5% of customers preferred purchasing policies through a broker or advisor, indicating the importance of specialist or technical advice. The channel declined by 7.8pp. This shows that insurers have strengthened their position in this line.

UK Term Assurance Market Trends

The UK term assurance market trends likely to gain traction in the upcoming years are a surge in innovation focused on consumer needs pertaining to health and wellbeing, significant regulatory changes, and crucial technological innovations. The pandemic has prompted several life insurers to offer at-home GP services instead of requiring in-person examinations. Virtual screenings have proven successful and provide a service that would not have been available otherwise. In May 2022, Aegon UK launched an advisor dashboard with the goal of bringing together protection applications on a single online platform.

In the coming years, technology investment will pick up and have an impact on every area of insurers’ operations, from internal workflows to the services and goods they offer clients. For instance, in March 2023, Aviva UK renewed its partnership with insurance software provider Majesco to enhance its underwriting profitability and risk mitigation capabilities.

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UK Term Assurance Market Segmentation by Type

The key UK term assurance market types are non-mortgage-related term assurance and mortgage-related term assurance. In 2022, the non-mortgage-related term assurance term assurance dominated the UK term assurance market share. Customers preferred to either purchase policies independently or be fully advised.

UK Term Assurance Market Analysis by Type, 2022 (%)

UK Term Assurance Market Analysis by Type, 2022 (%)

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UK Term Assurance Market Segmentation by Channel

Some of the key channels in the UK term assurance market are insurers, broker/advisor, PCW, banks, and others. In 2022, insurers were the leading channels for non-mortgage-related term assurance policy purchases. In addition, in 2022, purchases through the bank channel also increased for mortgage-related policies but decreased for non-mortgage-related policies. This can be attributed to how banks offer fewer types of term assurance policies than insurers/brokers. For instance, HSBC Bank does not offer increasing term assurance policies. An increasing term assurance policy means that the assured value increases annually—normally by the Retail Price Index—and as a result the yearly premium is also revised up.

UK Non-Mortgage-Related Term Assurance Market Analysis by Channel, 2022 (%)

UK Non-Mortgage-Related Term Assurance Market Analysis by Channel, 2022 (%)

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UK Term Assurance Market – Behaviors and Attitude

Buying or moving to a new house were the top purchasing triggers for mortgage-related customers. The cost-of-living crisis and its influence on discretionary income in the UK made customers highly concerned about their debts/liabilities, including their mortgages. Life events such as buying a property, moving house, or starting a family tend to trigger purchases of non-mortgage-related term policies, and are thus key drivers of the term assurance market.

Cash lump sum and guaranteed sum were the top features for customers purchasing a non-mortgage-related term assurance policy, indicating that customers are drawn to clear financial benefits. Consumers are increasingly concerned about their ability to meet monthly financial commitments such as credit card dues, monthly bills, mortgage and rent payments, and saving money for retirement. This can be attributed to the impact of the cost-of-living crisis in the UK. In 2022, around 40.1% of term assurance customers (including both non-mortgage and mortgage-related customers) said they would consider using activity trackers in conjunction with their insurance policy. Wearable devices can be used to gamify life insurance policies, with rewards offered to customers when they achieve certain activity goals. Furthermore, these devices now double as monitors for diseases such as diabetes. Financial savings were the key driver for using activity trackers in 2022.

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UK Term Assurance Market – Competitive Landscape

Some of the key brands or UK term assurance market providers include Legal & General, Aviva, LV=, Zurich, and Scottish Widows. In 2022, Legal & General led the term assurance market for both non-mortgage-related term assurance and mortgage-related term assurance.

UK Term Assurance Market Analysis by Companies, 2022 (%)

UK Term Assurance Market Analysis by Companies, 2022 (%)

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• The proportion of consumers visiting a price comparison website (PCW) before purchasing mortgage-related and non-mortgage-related term assurance policies increased by 0.2pp and 3.6pp, respectively, from 2022 to 2023. The dependence on PCWs as a research method highlights how important price is in this line amid the UK’s cost-of-living crisis.

• 25% of mortgage-related term assurance policyholders chose to speak to an IFA or broker prior to purchasing a policy in 2023. IFAs remain fundamental to the distribution of protection products, given that they provide informed decisions based on consumers’ unique circumstances.

• Purchasing mortgage-related term insurance policies online via a PC/laptop fell by 0.6pp in 2023 compared to 2022.

• This shift highlights the growing preference for purchasing via more portable devices. Policies purchased via the provider’s app recorded a 0.9pp increase in 2023. Digitalization also helped providers to expand their direct business, particularly through their websites.

Key Highlights

  • Insurers and brokers were the leading channels for term assurance policy purchases in 2022, accounting for more than 50% each for all non-mortgage-related and mortgage-related policies.
  • For mortgage-related term assurance, the percentage of customers who purchased directly from the insurer decreased by 8.5pp in 2022, while non-mortgage-related term assurance increased by 4.0pp.
  • In 2022, online purchasing was widely preferred, accounting for 59.1% and 59.9% of total purchases for mortgage-related and non-mortgage-related term assurance policies. Digital methods are likely to remain the most popular method for purchasing term insurance policies.

Reasons to Buy

• Understand consumer purchasing decisions and how these will influence the market over the next few years.

• Improve customer engagement by recognizing what is most important to them and how insurers can adapt their products and services to meet their needs.

• Compare the Net Promoter Scores of key insurance providers.

• Discover which providers lead the way in the term assurance space and learn about new product innovations.

• Adapt your distribution strategy to ensure it still meets customer purchasing behaviors.

Legal & General
Royal London
Vitality Health
Scottish Widows

Table of Contents

Executive Summary

The Purchasing Journey

Behaviors and Attitudes

Brand Selection

Future Market


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