Last year proved a “bumper” year for income protection (IP) sales, however life sales slipped and the whole of life market has not recovered from the “substantial” decline posted in 2022, according to Swiss Re.
The reinsurer’s latest Term & Health Watch report produced in conjunction with IPipeline showed sales of new income protection policies jumped 18% in 2024.
However, this growth was not mirrored across the market as overall new long-term individual protection sales grew by only 2.2% last year, with 2,041,428 new term assurance, whole life, critical illness and income protection policies purchased.
IP booming
The report found new IP policies increased by 18%, with 235,063 policies purchased in 2024, up from 198,566 in 2023. This continued the upward trajectory of IP sales following 10% growth posted in 2023.
Almost half (49%) of new policies sold in 2024 had a limited payment term (LPT) – although this was down from 56% in 2023 and 57% in 2022. Two-year payment policy sales increased by 1.3% in 2024, with 98,048 policies sold, up from 96,817 in 2023 when 12% growth was recorded.
However growth transferred to normal retirement age (NRA) policies that potentially pay benefits up to the policy expiry term, which increased by 36.6%, up from 88,211 to 128,558. Again, this compared with 12% growth in 2023.
Life and CI stagnant
Turning to term and critical illness, total new term assurance sales, including those with a critical illness (CI) benefit fell 0.8%, with 1,421,512 policies sold, down from 1,433,089 in the previous year.
In contrast to the total drop, there was 3.6% decreasing term assurance (DTA) growth, with sales up to 317,649 from 306,266 in 2023 when sales dropped to their lowest level since 2016.
The number of term assurance-only new policies remained flat at 1,014,958 in 2024.
When it comes to whole of life, the report indicated the market is yet to recover from the substantial drop recorded in 2022.
New guaranteed acceptance whole of life purchases fell 1.5%, with 219,561 polices sold, down from 222,802 in 2023 while sales of underwritten whole life policies without a CI benefit decreased by 8.2% from 28,975 in 2023 to 26,595 in 2024. This followed on from several years of continued growth.
Mortgage market flux
Joanna Scott, author of Term & Health Watch 2025 and technical manager and industry affairs manager, life and health UK and Ireland at Swiss Re (pictured), said the findings were reflective of another unpredictable year for UK households, with a change of government and rising geopolitical tensions further afield.
“In a continued high-interest rate environment with cost pressures mounting for households, it’s encouraging to see so many pockets of positivity – not least in the realm of income protection and decreasing term sales. This was in no small part down to improvements in the mortgage market,“ she said.
“Looking ahead, a defining feature of the second half of 2025 will be maturing mortgages from the Covid-19 pandemic house buyers’ cohort.
“With the holders of cheaper fixed-rate mortgages facing an increase in repayments of 200bps-250bps, it will be interesting to see what impact this has on protection take-up.
IP sales positive
Scott added the growth in sales of retirement age income protection and one- and two-year LPT products was particularly significant.
“The government is on a clear mission to keep people in work as part of its plans to boost productivity,” she continued.
“The Keep Britain Working review, led by Sir Charlie Mayfield, has shone a real light on the role of employers and what they can do. But it has also highlighted the role of income protection insurance in supporting people both financially and medically while minimising government spending.
“Sales of NRA and LPT products are now split 51:49. This is hugely positive when considering the potential impact on the welfare state if an employee is unable to return to work before the end of a policy’s payment period. But there is still a long way to go.“
Ties to mortgage sales loosening
A further trend noted in the report was the growth in stand-alone critical illness (SACI) for lower average sums assured. SACI sales increased by 36,497 in 2024, while term with CI sales fell by 11,289. The total number of new CI policies, attached to life cover and stand-alone combined, increased by 2.5%, to 545,251.
Scott continued: “The steep increase in SACI sales suggests that CI sales are slowly becoming less tied to the sale of mortgages as the main distribution channel. It could also be indicative of a trend towards people taking out smaller add-on cover as part of a menu plan.”
More broadly, the last two years has seen a shift towards protection being purchased following financial advice. Non-advised sales fell by 6.5% in 2024, following a much more pronounced 27% drop in 2023.
Advisers valuing protection
Paul Yates, product strategy director at IPipeline, said the report indicated an adviser community which was once again valuing protection as a key component of its advice process.
“Advisers are increasingly realising greater value from the protection market as they refine their sales and recommendation processes to better meet their clients’ holistic protection needs,” Yates continued.
“Our latest data highlights improved efficiency, with stronger quote-to-policy conversion and a growing preference for multi-benefit plans – increasing product density per client. Multi-benefit plans now represent over a third of all protection sales.
“We’re also seeing a clear shift toward quality over cost, with advisers placing less emphasis on just the lowest-priced options. The continued growth in annual premium equivalent relative to new policy volumes underscores this trend. It’s a compelling sign that advisers are delivering more comprehensive protection solutions for their clients.“
