The income protection insurance market in the UK has experienced significant growth, with recent data indicating a marked increase in sales, particularly among younger demographics.
Research by Eleos and Gen Re reveals that income protection annual premium equivalent (APE) has nearly doubled over the past four years, reaching an estimated £108 million in 2024, up from £58 million in 2023. This growth can be attributed to several key factors, including economic instability, global health concerns, and shifting consumer behaviours, especially among younger adults.
Growth in income protection sales driven by younger generations
One of the most striking trends identified in Eleos’ research is the surge in income protection policy uptake among younger adults. The 25-34 age group now accounts for 52% of policyholders, while the 35-44 age group represents 30%, indicating that younger adults are increasingly viewing income protection as a key part of their financial planning.
This demographic shift can be linked to several factors, including increased financial literacy and greater awareness of the need for financial security in an uncertain economic environment. The rise of the gig economy and less job security may also be prompting younger adults to seek protection for their income.
According to Kiruba Shankar Eswaran, CEO of Eleos, “The findings of our report underscore a significant shift in the income protection insurance landscape. We’re seeing younger generations taking proactive steps to secure their financial future.”
Economic conditions and global health concerns drive uptake
Economic instability has been a significant driver of income protection sales in recent years. Major events such as the 2022 mini-budget, which led to increased mortgage rates and economic uncertainty, have heightened awareness of financial vulnerabilities. For those purchasing policies within the last two years, 47% cited economic conditions as a key influencing factor, compared to just 15% of policyholders who took out policies more than two years ago.
The cost-of-living crisis, driven by high inflation, has further underscored the need for financial protection, with households seeking ways to secure their income against future economic shocks.
In addition to economic factors, global health concerns have also played a significant role in driving income protection sales. The long-term effects of the COVID-19 pandemic, coupled with ongoing concerns about new health threats and the NHS’s challenges, have increased awareness of the need for financial protection in the event of illness. A third of recent policyholders cited global health conditions as an influence on their decision to purchase insurance, a significant increase from previous years.
Shifting motivations between households with and without children
Eleos’ research also highlights differences in the motivations for purchasing income protection between households with and without children. Non-parents were more likely to be influenced by external factors such as economic conditions and global health issues, whereas parents were more focused on protecting their immediate family unit. This distinction suggests that family status plays a key role in the decision-making process, with personal and family-centric considerations taking precedence for households with children.
The income protection insurance market in the UK is on a strong growth trajectory, driven by younger generations increasingly prioritising financial security in the face of economic uncertainty and health risks. As global challenges persist, income protection is becoming a vital component of financial planning, especially among those without children who are more attuned to external risks. The ongoing evolution of the financial services sector, coupled with digital innovation, offers significant opportunities for further growth in this market.
The integration of income protection into digital platforms and super-apps presents an exciting opportunity for insurers to capture market share and appeal to the digital-first mindset of younger consumers. As economic and health uncertainties continue, income protection insurance is likely to remain a growing and essential financial product in the years to come.
