The number of protection policies sold in 2025 rose 1.4% continuing the market’s incremental recovery, according to data from reinsurer Gen Re.
New policies sold rose to 2,042,789 last year from 2,015,560 in 2024, which itself was up by 0.1% from 2023.
Excluding the guaranteed whole of life market, all other product areas grew over the year, although this was more marginal for some sectors than others.
Underwritten whole of life new completions, which rose 11% to 18,000 policies, and income protection (IP), which was up 9% to 314,000 new policies, were the strongest performing product markets.
Standalone critical illness (CI) was up 5% to 86,000 new policy sales, term assurance rose 3% to 1,062,000 while accelerated CI ticked up 1% to 424,000 completions.
The overall value of new policies sold on an annual premium equivalent (APE) basis was more encouraging growing by 7% to £820m from £767m in 2024.
Broken down by product group, term assurance, accelerated CI, standalone CI and income protection were up 8%, 3%, 6% and 5% respectively.
Underwritten whole of life sales rose a remarkable 52% by APE to £63m, while guaranteed whole of life sales fell 16% to £40m.
Mixed quarter
Meanwhile, data for the final quarter of the year indicated 511,088 individual protection policies were sold from October to December, up from the 500,087 a year earlier.
Though this was down from 516,283 in the third quarter of the year.
Gen Re noted that IP and standalone critical illness (CI) performed well with each recording their best quarter of sales in at least 10 years.
Total annual premium equivalent (APE) also rose, hitting £212m from £211m in the previous quarter.
Term assurance rebounds
Gen Re noted that term-assurance sales in 2025 were 3% higher by policy count and 8% higher in APE terms compared to 2024.
“This has reversed three straight years of slight decline,” it said.
“Each quarter in 2025 did better than the respective quarter in 2024, and for the first time in our Protection Pulse data, there were three quarters with APE above £90m; typically, we may see one quarter in a year where sales have exceeded £90m.
“The growth seems to be driven by the mortgage market, with our data showing an increase in term assurance being used to protect mortgages.”
Income protection (IP) continues to grow policy numbers up 8% outstripping the APE growth of 5%.
“This continues what was seen in 2024 and continues a pattern of reducing average premium size by policy,” Gen Re said.
It said this trend was likely driven by several factors, with the three main ones being:
- Increased engagement from younger customers who may be likely to take out policies with lower sums assured than those in the older age group to whom insurers have traditionally sold IP policies;
- The rise in the number of customers purchasing IP cover via menu plans; and
- A shift over recent years with customers seeking a budget product, with a benefit paid over a limited period, rather than to retirement.
IHT reforms
On a positive note, in terms of the key factor driving increases in underwritten whole of life protection policies overall, Gen Re pointed to inheritance tax (IHT) reforms.
“A number of factors are driving this significant growth, with UK Inheritance Tax (IHT) planning a key driver,” it continued.
“Agricultural Property Relief (APR) and Business Property Relief (BPR) reforms are due to come into effect in April 2026, and further down the line in April 2027 pensions will also come into the scope of IHT.
“It is clear that the combination of these is driving individuals to take action. With premium growth far larger than the growth in the number of policies sold, it indicates that individuals are taking out ever larger policies.
“We think that there is likely to be further, significant growth in this area too, although there is a possibility that this is tempered by the product’s dependency on the economic outlook, in particular interest rates. These have a direct impact on the cost of the product, which then has an impact on its desirability and affordability.”
Impact of market study
Shedding light on why underwritten product, sales of guaranteed whole of life policies have really struggled, Gen Re cited the Financial Conduct Authority’s ongoing pure protection market study.
“A significant factor behind this reduction is the ongoing Pure Protection Market Study by the UK Financial Conduct Authority (FCA), with one of the focus areas of this study concerning whether guaranteed acceptance over 50s insurance offers fair value,” Gen Re said. “It is likely that this has led to firms easing off the marketing spend, which in turn reduces the level of sales.”
Positive outlook
The reinsurer was generally positive about the short-term prospects for the market.
“With the first big set of IHT changes taking effect in April 2026, we should continue to see an increased demand for underwritten whole of life policies,” it said.
“The conclusion of the FCA’s pure protection market study could have an impact on the guaranteed whole of life markets, and we expect to see continued growth in income protection and standalone CI,” it added.
