Life Insurance and Life Protection Products - UK - October 2007

Abstract

The Life Assurance Gap - the difference between the level of individual cover required and the actual amount in place - has been a cause of concern for the protection market for some time. Mintel' s consumer research shows that the vast majority of people understand the importance of life insurance but far fewer have adequate cover in place. In recent years the cost of life insurance has fallen considerably, however, cheaper cover has not led to an increase in sales or a reduction in the protection gap. Issues of trust, an uncertain housing market, increased regulation and consumer confusion present barriers to future growth within the life insurance market.

All sectors of the life insurance market have endured difficult conditions over the last few years leading to declining sales, in both the number of policies sold and the value of premiums. However, the variety of uses for the range of life insurance products available means that reversing such a trend is a complicated task. Indeed, while the markets for term assurance and endowments are expected to face continued pressure, at least in the short term, there are some indications from within the whole-of-life market, and the guaranteed acceptance market specifically, of an upturn in performance.

This report examines the key issues facing the life insurance industry today, ranging from demographic and economic factors to the impact of legislative and regulatory changes. The overall size of the life insurance market is assessed, while the report also identifies key players and innovation within the market. Consumer research highlights attitudes and behaviour towards life insurance.

The report concentrates primarily on the protection aspects of the life insurance market and does not cover in detail the associated investment aspects. The emphasis is on individual term life and whole of- life policies, although some attention is given to endowment business. As this report examines the market for individual life insurance, regular-premium and ordinary branch business provides the focus for this report