The individual life insurance market has been an increasingly dynamic one and the pattern is set to continue.
Changes to inheritance tax (IHT) present a unique opportunity for advisers to engage with clients and it is clear they have grasped the nettle in this regard with greater increased demand resulting.
Customer engagement and the requirement for ongoing services is also on the rise as the era of ‘buy and forget’ is over.
However, concerns persist about the number of providers operating across the market, although there have been reassurances from remaining players that they plan to remain.
And there are also acknowledgements that underwriting speeds are not up to par for those with medical issues.
Changes to IHT
“The reforms to inheritance tax offer a unique opportunity for advisers and providers to demonstrate expertise in the protection space as a key part of holistic wealth and IHT planning solutions,” Rebecca Lowe, retail product lead at Aviva, tells Health & Protection.
These changes include those outlined in the November Budget related to the administration of death benefits through pension schemes, extending the nil rate bands for another year, and expanding the £1m combined allowance use.
And it appears this unique opportunity is a key factor behind increased sales, as Justin Taurog, CEO at Vitality Life, points out.
“Recent changes to IHT rules, including the inclusion of pensions in IHT calculations from April 2027, have contributed to increased sales, particularly for whole of life products,” Taurog explains.
“As more families look to protect assets and manage tax exposure, discussions about placing protection in trust are becoming more common among insurers, advisers, and clients.
“We anticipate economic uncertainty and evolving tax rules will ensure life insurance firmly remains a key consideration for individuals.”
Expecting double-digit growth
Indeed, Justin Harper, chief marketing officer at LifeSearch, reveals the firm is expecting significant growth over the next year.
“While overall growth remains modest across the market, we are predicting double-digit growth for our business in 2026,” Harper explains.
“We’re seeing strong momentum in specific areas such as business protection and IHT-led life insurance, which are growing well above long-term averages, albeit from a relatively small base.”
Likewise, Heath Protection Solutions managing director Naomi Greatorex has seen an increase in life cover being used for inheritance tax planning, with a “sharp” increase in joint life, second death whole of life.
“We have also seen an increase in longer term policies being taken to age 90,” Greatorex continues.
“Royal London launched its joint life second death to age 90, and we hope more insurers follow suit to give advisers more choice here.”
Significant demand for gift inter vivos cover
Mike Farrell, protection sales and marketing director at LV=, agrees, adding: “The role of financial advisers remains vital for holistic planning, especially in areas such as IHT.
“With more estates exposed to IHT, demand for policies written into trust is increasing to ensure proceeds remain outside the estate and are available immediately on death.
“The gift inter vivos policy is one of the solutions supporting effective IHT planning, reinforcing the importance of expert advice from the outset.”
This is echoed by Ken Maxwell, director at John Lamb Hill Oldridge, who noted the advice firm has seen a significant rise in the demand for these policies.
“This is happening as more families are passing on wealth to the next generation and choosing to insure the seven year IHT on the transfers,” Maxwell explains.
“This has been accelerated not only by the changes to legislation around assets subject to IHT, but also concerns over possible changes to tax treatment around gifting.
“These types of policies enable the recipients to utilise the funds immediately without concern over a potential 40% clawback for tax should the donor die within seven years post gift.”
Role of adviser is vital
More widely, as this market evolves, the role of advisers becomes ever more important.
Emma Thomson, vice chairwoman at the Protection Distributors Group (PDG) and consultant at Emma Thomson Consultancy Services, says: “It’s vital that consumers understand the true value of the protection products they buy.
“While many assume cover is more costly than it is, customers still have budgets to work within and need to know they are getting value for money.
“Advisers also have a key role to play here; proactively contacting clients at regular intervals to ensure cover remains suitable but also encouraging them to get in touch should anything change between these touch points.”
According to Kristian Breeze, director at Ascend Broking Group, the era of buy it and forget it is dead.
“We are witnessing a fundamental psychological shift where value is no longer defined by a payout you will never see, but by utility you can use today,” Breeze explains.
“The Swiss Re Term & Health Watch 2025 highlights a surge in multi-benefit plans, now accounting for over a third of sales.
“Why? Because the modern consumer, battered by cost-of-living fatigue, demands a return on investment while they are still breathing.”
Advisers shape demand
And Jack Southcott, head of protection proposition at The Exeter, points out that demand will be shaped by the quality and consistency of protection advice, particularly for underserved groups who have historically been overlooked.
“A stabilising economic environment, easing inflation, and improved mortgage market conditions should also support confidence and affordability,” Southcott says.
“With around 1.8 million fixed-rate mortgages due to end in 2026, advisers will have a significant opportunity to revisit protection needs.
“Where conversations are grounded in people’s real responsibilities and financial risks, life insurance is far more likely to be seen as relevant and acted on.”
According to John Revill, sales development manager at UnderwriteMe, advisers have played a key role in driving growth of this market.
“Demand for life insurance and broader protection has remained resilient through 2025, despite cost-of-living pressures,” Revill says.
“The key driver is not a single spike, but sustained adviser-led engagement: consumers are increasingly willing to proceed even with medical disclosures, and advisers are more confident navigating underwriting complexity.”
Two speed system for underwriting
However there is a significant concern about getting policies on-risk, particularly for those applicants with medical queries.
And advisers are increasingly challenging provider underwriting speeds, an issue insurers accept needs to be addressed.
Peter Hamilton, head of market engagement at Zurich UK, tells Health & Protection: “We have to acknowledge that right now we have a two speed system,“ he says.
“If you have a more complex medical history, it’s going to take longer, through a combination of underwriting service delays in some cases, exacerbated by challenges in obtaining medical evidence.
“There will be a big focus on how digital innovation and AI can dilute and ultimately obviate these challenges.”
Technology driving innovation
Providers maintain that products are evolving and James Shattock, managing director of UK protection at Legal & General, argues innovation has been key to ensuring protection products remain relevant.
Claims submissions is one such area and Shattock adds that he expects the sector to increasingly embrace hybrid advice.
This is echoed by Setul Mehta, protection market lead at Royal London, who adds the emphasis on digital and technology advancements will continue to play a role in growing the market.
“Looking ahead several trends will shape demand for life insurance,” Mehta maintains.
“The outcomes of the FCA’s pure protection market study may well influence focus and future directions.
“Technology will continue to drive efficiency and reduce friction in the customer journey.
“Above all, the ongoing focus on intergenerational wealth transfer and IHT planning will ensure that life insurance remains a critical consideration for clients and advisers alike.”
