Recent research has unveiled a significant shift in income protection sales demographics. The study indicates that younger adults are outpacing their older counterparts in purchasing these policies.
New research conducted by Eleos reveals that Income Protection APE has almost doubled over the last 4 years from £58 million to £108 million. Consequently, there is a strong uptake of Income Protection amongst the younger cohorts. The 25-34 age group accounts for 52 percent of policyholders and the 35-44 age group for 30 percent.
In contrast, the dominant cohort for those who purchased policies over two years ago is the 34-44 group at 41 percent. There is also a significant presence of the 45-54 age group at 24 percent, almost double the figure of those who purchased less than two years ago. The 55-64 and 65+ age groups, while still minority segments, also have a stronger presence in policies bought over two years ago.
One driver is where households without children are more influenced by external factors such as global health and economic conditions than those with children for whom the immediate family unit is the central consideration in financial decision-making.
The signal for growth is with a consistent increase in Annual Premium Equivalent (APE) figures. This sustained growth trajectory signifies a marked shift in consumer behaviour and market dynamics.
In 2021, the APE stood at £66 million, representing a 13.8 percent year-on-year growth. This growth accelerated in 2022, with the Income Protection APE reaching £80 million, a 21.2 percent increase from the previous year. The most rapid growth was observed in 2023, with the Income Protection APE rising to £99 million (a 23.8 percent year-on-year increase).
Projections for 2024 suggest more growth, with an estimated Income Protection APE of £108 million – a 9.1 percent increase from 2023.
In terms of the main driver, for policyholders who purchased insurance in the last two years, economic conditions are a major factor for 18 percent and a minor factor for 29 percent, totalling 47 percent who are strongly influenced by economic considerations.
Speaking on the findings, Kiruba Shankar Eswaran, CEO of Eleos has told Digital Journal:
“The findings of our report underscore a significant shift in the income protection insurance landscape. We’re seeing younger generations, particularly those aged 25-34, taking proactive steps to secure their financial future. This trend presents a compelling opportunity for companies who want an embedded insurance solution to provide financial protection for their customers.”