The general consensus is that 2025 has been a relatively positive, stable year for the protection sector.
Providers have largely tinkered rather than introduce wholesale product overhauls as the sector awaits the Financial Conduct Authority (FCA) findings from its Market Study.
While underwriting delays continue to cause frustration from consumers who expect instant decisions, artificial intelligence (AI) offers opportunities for improvement.
And with income protection (IP) sales growing, along with other areas of protection, this all means that the sector is expecting stable sales to continue into 2026 and beyond.
Higher protection sales
“Protection sales are higher than this time last year both in terms of volumes and average case size,” Oliver Jones, commercial director at National Friendly, tells Health & Protection.
“We’ve seen a shift in multi-benefit take up with many distributors reporting that life insurance is being coupled with income protection rather than the traditional pairing with critical illness cover. We see this as a positive and a result of people being more aware of protecting their income from illness and more everyday accidents.”
Although Chloe Davies, head of protection distribution at London & Country Mortgages, points out income protection should not replace critical illness.
“Both have clear and essential roles within good advice. It is positive to see advisers building more balanced plans, championing a combination of benefits and tailoring recommendations to the individual needs rather than defaulting to a particular product type,” Davies says.
“We will need more of this approach if we are to genuinely close the protection gap.”
Further signs of life
While income protection continues to prove a top performer, there are signs of life in terms of sales growth across other sectors too.
Holly Ewing, distribution director of Beagle Street, part of the OneFamily Group, says: “Critical illness is also quietly improving, especially stand-alone CI. It’s becoming less tied to mortgages and more of a deliberate choice for people wanting some financial back-up if something serious happens.
“Term assurance, the traditional bedrock of protection is broadly flat. Some areas like decreasing term have picked up slightly with improvements in the mortgage market, but overall, it’s steady rather than growing. And whole-of-life is still softer than it was a couple of years ago.
But where it gets interesting is whole-of-life might (WoL) be on the verge of coming back into focus, Ewing says.
“With property values still high, frozen nil-rate bands, pensions increasingly being pulled into the estate for IHT from 2027, and changes coming to some business reliefs, more families are drifting into inheritance-tax territory often without realising it,” Ewing continues.
“That’s leading advisers to have more conversations about how clients can protect what they’ve built. And when whole-of-life cover is written in trust, it becomes more than insurance it becomes a simple, practical way to help cover an IHT bill and keep assets in the family.
“So, while volumes are still soft today, the underlying drivers for future demand are strengthening.”
Justin Taurog, CEO at Vitality Life, agrees with these assessments and says the provider has seen growth in interest and sales across its products.
“We’ve seen particularly strong growth in income protection as well as whole-of-life products, as awareness of the impact of inheritance tax continues to increase,” Taurog continues.
However, exits from work are of increasing concern for some workers as Kesh Thukaram co-founder of Best Insurance, notes.
“There is a significant uplift on unemployment insurance enquiries,” Thukaram says.
“Digital journeys have continued to improve, but there’s still a lot of legacy friction when it comes to long term IP – especially at the underwriting stage.
“The push towards more streamlined question sets and instant decisions is welcome, but it’s not universal yet.”
FCA Market Study
Looking to the future, perhaps 2026 will see providers embrace product innovation more keenly once the FCA’s Market Study has landed.
James Shattock, managing director of UK protection at Legal & General, says: “With the FCA’s Market Study still a major focus for insurers and advisers, there’s been limited proposition development in the market.
“However, we have seen protection customers increasingly using digital channels.
“Over 70% of L&G’s customers now prefer to apply for claims digitally rather than by phone and, to respond to this demand, L&G’s claims submissions process is now fully digitised for all retail protection claims, following the recent addition of single life and over 50s life insurance policies.”
Tim Hogg, director at consumer group Fairer Finance, maintains the real challenge now is around distribution.
“Insurers are waiting to see what the FCA’s market study will mean for commission structures,” Hogg says.
“The tension is clear: how do you increase access to protection without relying on distribution models that ultimately undermine the product’s value?”
But the FCA’s Market Study is not the only report that has exercised minds across the sector in 2025.
Prevention key theme for group risk
According to Mark Stephenson, CEO of Reframe Cancer, prevention of ill health is set to become a key theme across UK plc.
“We are seeing this come through now with the advice and recommendations from the Mayfield Review,” Stephenson says.
“Detecting cancer sooner shortens treatment times, reduces absence, and saves lives all while easing pressure on employers, insurers, and the NHS.
“So moving to a greater focus on prevention makes perfect sense and will help with better returns to work.
“I think we will really see a surge in cash plan growth as well, they cover the whole of the workforce and provide good return on investment.
“We will also see a bigger uptake in CI, it will become more important and sits well aside cash plans.”
For Glenn Thompson, chief distribution officer at Unum UK, the group risk market has fared relatively well this year, despite the challenging economic backdrop.
“Budgets are squeezed and HR professionals are under greater pressure than ever to prove the value of every pound spent,” Thompson says.
“This has created a ripple effect across the industry: providers must demonstrate tangible outcomes through high-quality products and services to retain and grow business.
“The income protection market continues to grow, driven by heightened awareness of the importance of workforce wellbeing and productivity.
“This has been reinforced by the Keep Britain Working review, which has brought protection and absence management to the fore and highlighted the need for joined up action to tackle economic inactivity caused by ill-health.”
Adviser ambitions
Amid anticipated increased demand for their services, advisers will seek to grow sales into 2026, according to Paul Yates, product strategy director at IPipeline.
“It is clear from our discussions with distributors that they are looking to grow their protection sales in 2026 – specifically closing gaps in cover for existing clients.
“We believe there will be several exciting initiatives looking at how data, AI and technology can be combined to help drive better financial resilience.
“I also look forward to the findings of the FCA protection market review.
“The demands in responding to the study, which although a welcome recognition of the importance of protection, have been a distraction from the growth we all seek.
“January will bring clarity, focus and drive back to the market. I expect this to provide more impetus and another year of growth.
“It is clear that advisers are searching for, and to some extent getting more efficiency through the protection recommendation process – this is the foundations of future growth.”
Broadly optimistic
As for advisers, Kristian Breeze, director at Ascend Broking Group, reports the feeling on market sentiment is “broadly optimistic”.
“Research from The Exeter shows that 51% expect income protection demand to rise and 44% forecast growth in life insurance during 2025,” Breeze says.
“However, challenges persist. Consumer trust remains fragile, with FCA Financial Lives data indicating that only 53% of life insurance customers express satisfaction, compared with 73% for home contents cover.
“Advisers also cite operational strain from regulatory compliance and the need for better digital tools to streamline onboarding and underwriting.”
In a similar vein, Alan Waddington, director of distribution at Cirencester Friendly, expects a “constructive” 2026.
“While in some respects it’s been a quiet year, there are enough positive indicators to suggest that next year will be another constructive one for industry,” Waddington says.
“The Market Study will be read and acted upon and both insurers and distributors will continue to look for the most effective ways to service our customers.
“There is much talk of the use of AI, and that is welcome, but we should ensure it delivers better outcomes for consumers and adds real value and not just jumping on the bandwagon.
“Ours is a people industry and I really want to keep face to face discussions at the heart of what we do.”
Jamie Page, head of protection distribution at The Exeter, adds: “The usual economic conditions will shape the outlook, but also a more active mortgage market and continued regulatory focus through the Consumer Duty and the Pure Protection Review.
“As a mutual, we see this as an opportunity for the industry to further prioritise the outcomes we deliver for members or policyholders at every stage of their protection journey.”
