Sales of new income protection policies soared by 18% in 2024, marking a standout year for the protection product, according to Swiss Re’s latest Term & Health Watch report.
The report, produced in conjunction with iPipeline, shows that while overall new long-term individual protection sales increased by a modest 2.2%, income protection significantly outpaced the rest of the market.
This strong performance comes as the protection sector continues to adapt to a high-interest rate environment and the evolving financial challenges facing UK households.
Joanna Scott, technical manager for life and health UK and Ireland at Swiss Re, said: “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.”
Among income protection sales, 49% of new policies had a limited payment term. Policies with a benefit period running to normal retirement age rose sharply by 36.6%, compared to a 12% increase in 2023. New two-year limited payment term policies rose by 1.3%.
Scott also highlighted the role of government policy in boosting demand, pointing to the Keep Britain Working review led by Sir Charlie Mayfield.
She said: “The government is on a clear mission to keep people in work as part of its plans to boost productivity. The Keep Britain Working review 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 income protection led the way, other areas of the market saw more mixed results. Term assurance and critical-illness sales fell by 0.8%, although decreasing term assurance saw a welcome recovery, rising by 3.6% after hitting its lowest level since 2016 the previous year.
Whole life sales remained weak. Guaranteed acceptance policies fell by 1.5%, and underwritten whole life products without critical illness cover dropped by 8.2%.
A bright spot for critical illness was the notable growth in stand-alone cover. Stand-alone critical-illness sales rose by 36,497 in 2024, while sales of term assurance with critical illness fell by 11,289. Overall, new critical-illness policies increased by 2.5% to 545,251.
The report also revealed a continued shift towards advised protection sales. Non-advised purchases fell by 6.5% in 2024, following a sharp 27% decline in 2023. This trend suggests a growing recognition of protection as a core part of financial planning.
Paul Yates, product strategy director at iPipeline, said: “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.
“Our latest data shows stronger quote-to-policy conversion and a growing preference for multi-benefit plans, which increase product density per client. Multi-benefit plans now account for more than a third of all protection sales.”
