"As higher interest rates persist, it’s no surprise that new term purchases suffered as the pressure on households continues."
- Joanna Scott, Author of ‘Term & Health Watch 2023’ and Technical Manager & Industry Affairs Manager at Swiss Re
In 2023, 1,997,450 new Term Assurance, Whole of Life (WOL), Critical Illness (CI), and Income Protection (IP) policies were purchased – this is 5.5% lower than in 2022.
All new term policy numbers fell, except for Relevant Life Insurance which grew by 11.4%. The biggest drop was level term with CI which fell by 12.3% (over 92k policies) compared to 2022. Notably, standalone CI sales went against the downward trend, increasing by 15%.
New IP policies increased by 10%, rising to 198,566. This was led by strong growth in both ‘to retirement age’ products and two-year limited payment term products, which grew by 12.5% and 12.2% respectively. However, this progress was offset by the 17.3% fall in one-year limited payment term products.
New guaranteed acceptance WOL policies rose by 7.8% - new purchases remain low compared to 2021 and previous years. Sales of underwritten WOL policies increased by 4.2%, equating to 28,975 purchases.
Joanna Scott, Author of the ‘Term & Health Watch 2023’ Report and Technical Manager & Industry Affairs Manager at Swiss Re, highlighted that these findings reflect another challenging year for UK households, with rising interest and mortgage rates compounding financial pressures.
“It’s great to see IP sales continue to grow at a good pace. The numbers seen in the ‘Term & Health Watch 2023’ build on the strong workplace long-term disability insurance numbers we reported in our ‘Group Watch 2024’ report earlier this year,” she added.
READ MORE: Swiss Re finds UK economy has shrunk but the number of people insured has increased
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 Crisis continues to impact people’s willingness to seek out Life Insurance when faced with other competing priorities.”
However, he was pleased to see report findings “show the value a good adviser can bring, such as the opportunity to build on and foster an existing customer relationship.” Swiss Re’s data also showed higher numbers of policies have been placed in trust through advised channels, which provides “peace of mind that the proceeds of the policy will go to the right beneficiaries.”
