Increased activity in the UK housing market has boosted individual critical illness and income prote...
Increased activity in the UK housing market has boosted individual critical illness and income protection sales, according to research from ERC Frankona, writes Rachel Williams.
The annual survey from the reinsurer revealed that the number of individual critical illness policies sold in 1999 rose by 21%, reaching 820,397 compared with 677,017 in the previous year.
Catherine Baxter, marketing analyst at ERC Frankona, said: "With total mortgage lending in 1999 up 28%, the close relationship between the two markets is obvious. There are now some three million critical illness policies in force in the UK. Even allowing for the odd case where an individual has more than one policy, one in 10 working people now have critical illness cover."
Around a third of critical illness policies were written through IFAs, a much higher proportion than 10 years ago when the survey was first carried out. ERC Frankona said that this may be associated with the core definitions that were standardised in the mid-1990s which helped intermediaries warm to the product. The research also found that the average sum assured for new critical illness policies is £52,312 while the average for existing policies is £47,636.
Meanwhile, individual income protection business has reached an all-time high with total sales peaking at just below 174,000, representing a year-on-year increase of 9.5%. This outstrips the previous peak in 1991 by 14,000.
Baxter said: "The housing market boom has undoubtedly made a significant contribution to income protection sales in 1999. Consumers are at last recognising the need to protect their biggest financial commitment against the event of incapacity and, despite the recent calming of housing market activity, it is hoped that this recognition will produce a much higher volume of income protection sales in 2000 and beyond."
