Reinsurer reveals more than two million term policies sold last year
Swiss Re's annual analysis of life and health insurance sales in the UK ' Term & Health Watch ' has shown 2002 to be a positive year for the protection market. Sales of term assurance, critical illness (CI) and income protection (IP) policies rose significantly with more than two million new term assurance policies being sold. IP sales rose by almost 20%, while the number of people covered under a CI policy increased by 34%.
While the boost in sales is certainly good news for the market, the paper also raised concerns over the value and stability of certain areas of the protection market. Sales of standalone CI policies have increased by almost 11%, and some industry figures feel the increase shows that consumers are being poorly advised into buying a standalone product when an accelerated policy combining both CI and term could be better value.
Ron Wheatcroft, technical manager at Swiss Re admitted accelerated policies offer con- sumers more protection, but stressed that standalone CI does have its place in the market and the increased sales are a good sign.
'For single people with no dependants, standalone critical illness is more important than life cover. They have no family to provide for so a death benefit is not as important as a lump some paid directly to them if they get a critical illness,' he said.
The report also illustrated the immense impact the housing market has had on sales figures. More than half of all new protection policies sold in 2002 were mortgage related, but Wheatcroft warned that while the growth of the housing market is likely to continue to fuel protection sales, depending too heavily on the UK housing market does have its problems.
'The mortgage market is important as a means of selling protection while things are good, but a downturn in the housing market could have a negative impact on sales,' he said.
Although the report showed a 20% increase in IP sales, CI policies continue to prevail, a trend that Shelley Robertson, protection brand manager at Skandia, said needs to be addressed.
'It is interesting to see that critical illness is still far outselling income protection. I would like to see greater sales of income protection over the next few years. Consumers need to be aware that one policy does not compensate for the other and that it is essential they have both to ensure all their protection needs are addressed.'
