Sales of new long-term individual protection policies in 2023 decreased by 5.5%, according to Swiss Re’s Term & Health Watch 2024 Report.
In 2023, 1,997,450 new term assurance, whole life, critical illness, and income protection policies were purchased.
This continued a decline from 2022, where sales fell by 7.8%, as the cost-of-living crisis continued to impact many households.
All new term policy numbers fell, except for Relevant Life cover, which grew by 11.4% to 24,838.
The largest drop in policy sales was seen in level term without critical illness which fell by 12.3%, with a decline of more than 92,000 policies compared with 2022.
Standalone critical illness sales bucked the downward trend, increasing by 15%.
In addition, new income protection policies increased by 10%, to 198,566.
This was led by strong growth in both ‘to retirement age’ products and 2-year limited payment term products, which grew by 12.5% and 12.2% respectively.
This growth was offset by a 17.3% fall in the sale of 1-year limited payment term products.
New guaranteed acceptance whole life purchases increased by 7.8%.
Joanna Scott, author of Term & Health Watch 2023 and technical manager and industry affairs manager, L&H UKI, at Swiss Re, said: “It is great to see that income protection sales continue to grow at a good pace.
“The numbers seen in Term & Health Watch build on the strong workplace long-term disability insurance numbers we reported in our Group Watch report earlier this year.
“However, as higher interest rates persist, it is no surprise that new term purchases suffered as the pressure on households continues.”
Scott continued: “There is also still a huge gap where UK workers would receive little to no support if they were to fall ill.
“Many employees do not enjoy cover which goes beyond statutory sick pay (SSP) at £96.35 a week and there are 4.26 million self-employed workers in the UK who have no entitlement to SSP.
“So while we are encouraged by the growth in income protection sales, there is more to be done to raise awareness across the industry to those who would still be exposed if the worst were to happen.”
Ron Wheatcroft, technical manager at Swiss Re, added: “The fall in the number of new non-advised term products shows that the cost of living continues to impact people’s willingness to seek out life cover when faced with other competing priorities.
“The difficult mortgage market has affected decreasing term assurance sales, both with and without a critical illness benefit, but it is good to see new critical illness purchases outside the mortgage sector faring much better by comparison.
“As before, the results show the value that a good adviser can bring, such as the opportunity to build on and foster an existing customer relationship.
“Swiss Re data also show that higher numbers of policies are placed in trust through advised channels, which provides peace of mind that the proceeds of the policy will go to the right beneficiaries.”
