Swiss Re’s latest Term & Health Watch report found that sales of new income protection policies grew by 18% in 2024, making it a strong year for this type of cover.
Overall, new long-term individual protection sales increased by 2.2%, with 2,041,428 new policies sold across term assurance, whole life, critical illness (CI), and income protection.
However, not every product performed well, with some business lines seeing drops.
Term assurance sales, including those with a critical illness benefit, fell by 0.8% (11,577 fewer policies).
Decreasing term assurance grew by 3.6%, a turnaround after a drop in 2023. Term assurance-only sales stayed flat.
New income protection policy sales rose by 18%, up from 10% in 2023.
Of these, 49% had a limited payment term, with 2-year limited payment term policies up by 1.3% and normal retirement age policies up by 36.6%.
Research showed that whole life sales have not recovered from the drop in 2022.
Guaranteed acceptance whole life sales fell by 1.5%, and underwritten whole life policies without a critical illness benefit dropped by 8.2%.
Joanna Scott, author of Term & Health Watch 2023 and technical manager & industry affairs manager, L&H UKI, at Swiss Re, said: “2024 was another busy year in the UK, both politically and economically.
“In a continued high-interest rate environment with cost pressures mounting for households, it’s encouraging to see so many pockets of positivity – not least in the realm of income protection and decreasing term sales.
“This was in no small part down to improvements in the mortgage market.
“Looking ahead, a defining feature of the second half of 2025 will be maturing mortgages from the Covid-19 pandemic house buyers’ cohort.”
Scott added: “With the holders of cheaper fixed-rate mortgages facing an increase in repayments of 200bps to 250bps, it will be interesting to see what impact this has on protection take-up.”
“The Government is on a clear mission to keep people in work as part of its plans to boost productivity.
“The Keep Britain Working review, led by Sir Charlie Mayfield, has shone a real light on the role of employers and what they can do.
“But it has also highlighted the role of income protection insurance in supporting people both financially and medically while minimising Government spending.”
He said: “Sales of NRA and LPT products are now split 51:49. This is hugely positive when considering the potential impact on the welfare state if an employee is unable to return to work before the end of a policy’s payment period. But there is still a long way to go.”
Sales of stand-alone critical illness (SACI) cover increased by 36,497 in 2024, while term with critical illness sales fell by 11,289.
The total number of new critical illness policies, both attached to life cover and stand-alone, went up by 2.5% to 545,251.
He added: “The steep increase in SACI sales suggests that CI sales are slowly becoming less tied to the sale of mortgages as the main distribution channel.
“It could also be indicative of a trend towards people taking out smaller add-on cover as part of a menu plan.”
Data also showed that advised sales of protection have grown, with non-advised sales down 6.5% in 2024, after a 27% drop in 2023.
Paul Yates, product strategy director at iPipeline, said: “Advisers are increasingly realising greater value from the protection market as they refine their sales and recommendation processes to better meet their clients’ holistic protection needs.
“Our latest data highlights improved efficiency, with stronger quote-to-policy conversion and a growing preference for multi-benefit plans – increasing product density per client.
“Multi-benefit plans now represent over a third of all protection sales.”
Yates added: “We’re also seeing a clear shift toward quality over cost, with advisers placing less emphasis on just the lowest-priced options.
“The continued growth in APE (£) relative to new policy volumes underscores this trend.
“It’s a compelling sign that advisers are delivering more comprehensive protection solutions for their clients.”
