Last year marked an “excellent” year for sales of individual long-term protection, with over 2.1 million, industry figures reveal.
The statistics – compiled every year by Swiss Re for its Term & Health Watch analysis – shows that the total number of new individual policies purchased is the highest since 2004.
Industry observers expected to see an increase in sales of income protection (IP) insurance during the period, but Swiss Re’s estimate of a 20.9% spike in demand in 2019 far exceeded many estimates.
The report, which analyses new individual long-term life and health protection sales in the UK, shows that 2,182,610 new term, whole life, critical illness (CI) and income protection (IP) policies were purchased in 2019, an increase of 5% year on year.
Overall term sales grew by 1.9%, while term sales without CI increased by 4.0%.
But term sales, where the product included a CI benefit, fell by 2.8%.
Guaranteed acceptance whole life policies grew by 6.3% and fully-underwritten whole life policies, from a much smaller base, by 29.2%.
The report, produced in conjunction with iPipeline, draws on qualitative research carried out with financial advisers specialising in long-term protection.
Abbie Marlow, Swiss Re Client Manager and joint author of the report, said the growth in purchases of IP is “very encouraging”.
She said: “In particular, we have seen growth from some of the smaller mutuals who are very clearly having appeal to both consumers and to advisers.”
Marlow said it is also good to see greater take up of decreasing term policies, both with and without CI cover.
She said: “As we know that more networks and advisers are putting greater emphasis on how a mortgage is to be repaid, these numbers are an encouraging sign that this is flowing through – with more households becoming resilient as a result.”
The report also looks at life policies taken out by businesses to protect against the financial consequences of losing a key person who dies or becomes disabled and cannot work.
Ron Wheatcroft, Swiss Re Technical Manager and joint author of the report said: “While the figures show that in some parts of the industry 2019 was a bumper year, the figures around business protection were once again disappointing. The Government wants to encourage SME businesses in particular to support the health of their workforces – a very good thing – however too few businesses seem to have arrangements in place to protect the health of their own business were they to lose an individual key to its success.
“The British Insurance Brokers Association (BIBA) set up a signposting agreement in January 2020 to improve access to insurance for non-standard risks, and we believe a similar referral service for advisers skilled in such business risks could be one way of protecting more firms. Beyond that, there is clear need to drive awareness of the risks and how to manage them among a greater amount of financial advisers, wealth managers and wider businesses.”