Swiss Re has called more than half of new level term assurance (LTA) policies being purchased without advice for the first time a “watershed” moment.
Ron Wheatcroft, technical manager for life and health UK and Ireland at the reinsurer, said the data reflected evolving buying and generational preferences.
The data contained in Swiss Re’s 2021 Term & Health Watch report showed 50.3% of all new level term policies were purchased without advice, up from 49.9% in 2020.
Speaking to Health & Protection, Wheatcroft revealed the “watershed” figure was the highest recorded in the report’s history, adding that around five years ago that figure would have been around 25%.
Wheatcroft added the data reflected that increasingly customers were more comfortable buying products online directly themselves.
“I think it’s a reflection of the trend towards people buying directly when they decide they want a product and that’s probably generational,” he said.
“Although I was always hesitate saying things like that because it’s a little bit simplistic, there probably is a generational aspect to it.
“There’s a generation that haven’t been born with the concept of an adviser that advises the family. That’s partly the role of the old direct salesforces which disappeared 20 years ago where they would probably have closer relationships.
“So I think to some extent it’s just reflecting natural buying preferences and just natural preferences that people have.”
But Wheatcroft added complexity of the product offering also influenced whether customers would enlist the help of an adviser.
“If you look below the 50.3% for level term, if you look at the other products, the rate of non-advised sales drops off quite substantially if you add a product with a critical illness rider,” Wheatcroft added.
“What it says to me is if you take the products that are most easily and readily understandable – which are level term, decreasing term and standalone critical illness cover – they’re probably the most simple products for people to understand,” Wheatcroft continued.
“But if you package them together, it gets more complex for consumers to think through.”
The latest Term & Health Watch report showed a 6.3% increase in individual protection sales in 2021 compared to the previous year, with Legal & General and Aviva claiming a significant slice of the growth to conduct almost half of all protection new business.