By Robyn Hall Price wars, advances in technology and improvements in mortality have made the term as...
By Robyn Hall
Price wars, advances in technology and improvements in mortality have made the term assurance market more competitive, Swiss Re Life & Health's latest Termwatch survey has found.
Ron Wheatcroft, technical manager at Swiss Re, said: "The competitive nature of today's term market cannot be overstated. It is emphasised by the fact that a £1 premium purchases on average £247 sum assured, compared with £227 for in-force business."
Across a broad range of ages there was evidence that male mortality had improved at a rate of 1% faster than that of females. There was also some early evidence that mortality experience among young females may be deteriorating.
Other key findings included:
l The top rate in the male, 30 year old, non-smoker category for a 15-year term dropped rapidly during the last year while the same rate for females was slightly up.
l The 45 year old male category showed falling rates across the board with competition maintaining a narrow gap between the top 10 providers.
l Mortality rates supported a favourable reduction in premiums for the 45-49 age group. However, the 50-54 age group showed signs of possible deterioration in mortality experience.
l Smoker rates for 30 year old females with a five-year term and £100,000 cover increased by 17%.
Wheatcroft said: "The persistent downward trend in underlying mortality appears to be changing and we expect rates to move more slowly and less predictably in the short-term future."
Norwich Union, CGU Life and Legal & General are among those to reflect the change, all slashing level term assurance rates - some by up to 18% - as competition in the market hots up.
The largest reductions in the CGU Life range were focused on male and female non-smokers seeking cover upwards of £100,000. A male aged 35 next birthday who is a non-smoker and in good health can take out a policy with a 25-year term and a sum assured of £200,000 for £26.60 a month. The cover would have previously cost £27.60 a month.
Legal & General has cut the cost of its term assurance range by up to 8%. Jonathan Wilson, the group's protection director, said: "Over the past five years increased efficiency and improved life expectancy has enabled us to drastically reduce premiums - in some cases by up to 62%."
A male aged 40 next birthday who is a non-smoker and in good health can take out a policy with a 10-year term and a sum assured of £50,000 for £8.40 a month. The cover would have previously cost £9.10 a month.
Norwich Union, which is cutting rates by as much as 18% on selected level term assurance products, said: "There has never been a cheaper time to buy life cover."
The Norwich Union rate cut means a 30 year old non-smoker buying its Level Temporary Insurance Plan will now pay £11.40 a month for £100,000 of cover over a 20-year term - a 17% cut on the previous premium of £13.70.
Martin Chapman, life marketing manager at Norwich Union, said new mortality assumptions on life expectancy had led to a fall in the price of term insurance policies.
He added: "Our new rates are guaranteed for the life of the policy and reflect our determination to offer highly competitive terms on our protection products as well as demonstrating our commitment to giving customers real value for money."
