UK Life Insurance Market Overview
The UK life insurance market is valued at an estimated £37 billion in revenue. Over the past five years, the industry has seen a compound annual decline of 3.6% according to Ibis World. The market is dominated by 15 major life insurance companies that collectively hold around 75% of the UK life cover market share, as reported by the Financial Conduct Authority.
In 2023, a total of £3.47 billion was paid out to individual policyholders in life insurance claims. The Financial Conduct Authority (FCA) initiated a market study in August 2024 to examine how life and protection insurance products are sold and the commissions paid to financial advisors. The findings are expected to be published by the end of 2025.
Life Insurance Premiums and Policies
According to data from the Association of British Insurers (ABI), there were 20.7 million life insurance policies active in the UK as of 2021. An additional 7.4 million individuals were covered through group life insurance schemes provided by their employers. In 2022, UK customers paid £191.9 billion in direct premiums to life insurance companies, making it the highest among European nations.
Types of Life Insurance and Adoption Rates
The adoption of life insurance varies across different demographics. As of the latest surveys:
- 35% of the UK population holds a life insurance policy.
- Term life insurance remains the most popular type, with 84% of policyholders having this coverage.
- 28% of mortgage holders under 40 lack any form of life insurance coverage.
The sales of term life assurance reached their lowest point in seven years in 2023, with 1.5 million policies sold. The distribution of life insurance types among policyholders includes:
- Term life insurance: 84%
- Critical illness cover: 31%
- Joint life insurance: 28%
- Terminal illness cover: 18%
- Children’s cover: 16%
- Over 50s life insurance: 11%
Life Insurance Term Length and Payouts
The survey by Forbes Advisor revealed that the most common term length for life insurance policies is up to 20 years, chosen by 31% of policyholders. The average payout for life insurance claims in 2023 was £80,403, with a total of 48,782 new claims paid out during the year. The payout rate for major insurance providers ranged from 94% to 99.7%.
Reasons for Purchasing Life Insurance
Forbes Advisor’s survey identified the primary reasons UK residents purchase life insurance:
- General caution (38%)
- Becoming a parent (30%)
- Mortgage requirements (21%)
- Ensuring mortgage payments in case of death (15%)
- Contractual job requirements (11%)
- Dangerous occupation or lifestyle (11%)
Choosing a Life Insurance Policy
Policyholders select their life insurance through various channels:
- 36% use finance professionals/brokers
- 28% rely on family recommendations
- 25% use comparison websites
- 15% are influenced by media advertising
- 12% find policies through targeted online ads
For more detailed information on life insurance statistics and trends, you can refer to resources from the Association of British Insurers and the Financial Conduct Authority.
