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Life insurance statistics

Is the UK prepared for the worst?

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By

Danny Butler

Updated

Fact checked

It might not be something that you want to consider, but life insurance plays an important role in planning for your family’s financial future. We explored all of the latest statistics to find out how prepared the UK is for death. After all, as Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes”.

Life insurance falls under the broader category of protection insurance. Protection insurance includes life insurance but also other types of insurance such as income protection and serious illness insurance.

Quick overview

  • 20.4 million policies taken out in 2021 – 1.5% less than in 2020 (20.7 million).
  • 3.1 million new individual and group protections were taken out in 2021.
  • There are 10.4 million members of group life insurance cover of some form in the UK in 2020 – 1.2 million less than in 2018.
  • There are 450 authorised insurance companies in the UK.

How many life insurance protection policies are taken out in the UK?

Life insurance protection policies have decreased since 2014. In 2021 there were 20.4 million policies taken out, which is 30% less than in 2014 (29.3 million).

Year Protection Policies
2014 29,300,000
2015 28,600,000
2016 26,900,000
2017 25,700,000
2018 25,200,000
2019 23,700,000
2020 20,700,000
2021 20,400,000

How common is life insurance in the general insurance market?

Life insurance premiums take the majority of the market share of total insurance premiums. Since 2000, life insurance has averaged 71% of the insurance premium market share. The last year of data was 2020, where life insurance market share was 71%. In 2007 the market share stood at its highest level at 83%.

Year Year
2000 72.30%
2001 66.20%
2002 63.10%
2003 58.90%
2004 61.80%
2005 64.40%
2006 79.60%
2007 83.20%
2008 76.30%
2009 76%
2010 73.60%
2011 73.50%
2012 75.40%
2013 72.40%
2014 73.40%
2015 73.30%
2016 68.80%
2017 69%
2018 72%
2019 72.60%
2020 70.50%

Main reasons for life insurance claims

In 2021, cancer (32%) was the biggest reason for a life insurance claim. Heart-related claims were second at 20% followed by COVID-19 (13%), neurological reasons (5%), pneumonia (4%), stroke (3%) and COPD (3%).

Reason for taking out life insurance Percentage
Cancer 32.1
Heart Related 19.6
Covid-19 12.7
Neurological 5.2
Pneumonia 3.6
Stroke 3.3
COPD 3.1
Other 20.4

UK households with life insurance and mortgages

  • 10.99 million households in the UK have mortgages.
  • £142,755 is average outstanding mortgage debt in January 2022.
  • The average price of household bills for a year in 2021 is £25,000.
  • £3,600 is the average food bill per house per year.
  • 34% of people with a mortgage have no life insurance in place in 2020.
  • £8,864 is the average cost of dying in 2021, 4.3% less than in 2020.

Life insurance payouts in the UK

Each policy taken out is unique – but how often do insurers typically pay out for life insurance and how much?

  • £6.8 billion was paid out in protection policies in 2021 – £18.6 million each day on average.
  • 296,000 customers or families received a payout in 2021.
  • £22,900 is the average payout of a protection insurance policy in 2021.
  • 98% of protection claims were paid out – 97% term life insurance and 92.5% critical illness.

Life insurance demographics in the UK

  • 3.1 million new or individual group protection products were taken out in 2021.
  • 10.4 million of group income protection and critical illness schemes.
  • 7.4 million of these were life cover.

The amount of new life insurance protection policies taken out each year

In 2021, 3.1 million new individual and group protection policies were taken out. This is an increase of 17% new policies compared to 2019 (2,650,000).

Year New policies
2014 3,000,000
2015 2,300,000
2016 2,100,000
2017 2,000,000
2018 2,500,000
2019 2,650,000
2021 3,100,000

Sources used

  • ONS
  • ABI
  • OECD
  • Royal London
  • The Money Charity
  • More Than
  • Sunlife

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