Published on 10/09/2012
There has been an increase in protection policies sold in the UK over the past year, according to new data from the FSA.
Between April 2011 and March 2012, purchases of policies like critical illness cover and income protection rose 1.6 per cent. Much of this rise can be attributed to 2012, the first quarter of which saw a 5.8 per cent increase in sales.
The FSA report claims the sales growth coincided with an increase in mortgage sales to first-time buyers. It said there is a "strong correlation between mortgage sales and protection products because a house purchase is often the motivator for taking out cover".
In 2011/12 there were 601,305 pure protection sales made in the UK. A massive 80 per cent of these were critical illness policies sold as an add-on benefit to life insurance, a rise of 2.9 per cent.
The FSA says the increase is due to critical illness often being sold with life cover, which is usually taken out by homebuyers.
16 per cent of the protection sales in 2011/12 were income protection policies, a rise of 0.5 per cent.
Only 4 per cent of the protection sales were of standalone critical illness policies, a decline of 14.5 per cent. The FSA contributed the decrease to the rise in unemployment and fall in disposable income, since this type of cover can be expensive.
The report said: “The substantial decrease in standalone critical illness sales in 2011/2012 versus 2010/2011 can be partially explained by the state of the labour market.
“The unemployment rate rose from 7.7 per cent in April 2011 to 8.2 per cent in March 2012, and falls in real household disposable income by 1.6 per cent between the second quarter of 2011 and the first quarter of 2012.”
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, Life Insurance