"We’re seeing younger generations, particularly those aged 25-34, taking proactive steps to secure their financial future."
- Kiruba Shankar, CEO of Eleos
Gen Re’s Protection Pulse H1 2024 confirmed encouraging growth in the Income Protection (IP) and Whole of Life (WOL) markets, but a more challenging environment for Term and Critical Illness (CI) business. Notably, there’s been an 8% rise in IP sales since H1 2023. To gain deeper insights into the driving forces behind this increase, Eleos surveyed 800 IP policyholders in the UK, comparing policies bought more than versus less than two years ago.
41% of IP policies bought more than two years ago were for adults aged 35-44 years old, followed by 25-34 (28%), 45-54 (24%), 55-64 (7%), under 25 (less than 1%), and 65 or above (less than 1%). Whereas 52% of IP policies bought less than two years ago were for adults aged 25-34 years old, followed by 35-44 (30%), 45-54 (10%), under 25 (4%), 55-64 (3%), and 65 or above (less than 1%).
Eleos suggests these findings prove that younger adults are becoming increasingly aware that financial independence extends to protecting their health & wellbeing. This trend could be driven by factors such as increased financial literacy amongst younger generations, changing work environments with less job security, and the impact of recent global events on perceptions of financial risk.
In terms of influencing factors, the provider found economic conditions and global health concerns have significantly impacted the decision to purchase IP. For policyholders who purchased insurance in the last two years, economic conditions were a major factor for 18% and a minor factor for 29% - economic considerations influenced 47% of policyholders. Compared to policyholders of more than two years, only 15% cited economic conditions as an influencing factor.
Eleos believes this significant increase can be attributed to the impact of the 2022 Mini-Budget, economic instability – characterised by increasing government debt due to fiscal expansion and the need for the Bank of England to intervene to stabilise financial markets – and inflation.
Considering global health, 33% of policyholders who purchased insurance in the last two years cited health concerns as an influencing factor compared to just 14% of policyholders of more than two years. Notably, 11% of those who’d purchased a policy in the last two years thought health was a major factor, rising to 22% who said it was a minor factor.
Eleos stressed that ongoing pandemic concerns have had a lasting impact on public perception of health risks. Coupled with the emergence of new variants and other health threats such as monkeypox, the provider believes there is a heightened awareness of the potential for unexpected health-related disruptions to income. Likewise, Eleos cited the NHS Crisis and healthcare system vulnerability as substantial factors in public opinion.
Furthermore, Eleo’s analysis revealed that family status plays a key role in the decision to purchase IP, with noticeable differences between those with and without children. People without children were more influenced by economic conditions and global health conditions when purchasing IP. Of those with children, 31% said they’d been influenced by economic conditions whilst 21% cited global health conditions. Whereas 34% of those without children were influenced by the economy and 24% by global health conditions.
Eleos highlighted that the observed pattern may suggest a divergence in motivation for purchasing IP between individuals with and without children. Those with children are more likely influenced by personal, family-centric factors. In contrast, individuals without children seem more responsive to external stimuli beyond their immediate domestic sphere. This dichotomy could imply that parenthood fosters a more inward-focused perspective, where the immediate family unit becomes the central consideration in financial decision-making.
In light of these findings, the provider anticipates continued growth in the IP market, with a particular emphasis on digital-first solutions and products tailored to younger demographics.
“The findings of our report underscore a significant shift in the IP landscape. We’re seeing younger generations, particularly those aged 25-34, taking proactive steps to secure their financial future. This trend presents a compelling opportunity for companies who want an embedded insurance solution to provide financial protection for their customers,” said Kiruba Shankar, CEO of Eleos.
