The UK’s life insurance market is valued at over £200 billion in annual premiums, covering assets worth £840 billion. Yet despite its size, the sector has seen declining revenues over the past five years, according to IBIS World, with the rising cost of living and limited public understanding both contributing factors.
In 2023, the Financial Conduct Authority reported £4.85 billion paid out in claims on individual policies—providing vital support in times of bereavement, illness, or injury.
However, a new survey from UK-lifeinsurance.com reveals a worrying trend: nearly half of Brits lack coverage, and one-third hold misconceptions about how insurance works—especially in relation to mortgages and income protection.
As the cost of living continues to strain household budgets and homeownership becomes increasingly out of reach, financial protection is more crucial than ever. To address this, UK-lifeinsurance.com has launched the 2025 Life Insurance Index, aiming to inform and guide British consumers toward better protection decisions.
Moreover, over a thirds of over 55s don’t have a life insurance policy in place while more Gen Zs have policies in place compared to their Millennial peer group – 17% vs just 5%. A third of women don’t have a life insurance policy compared to just 16% of men. The Financial Conduct Authority’s Financial Lives 2024 – general insurance protection survey, was released last month and shows the percentage of women holding life insurance policies has fallen 1% since 2022. This highlights a growing need for tailored products such as over 50’s life insurance, which are specifically designed to offer coverage to older adults who may be underprotected.
More people in the East Midlands don’t have a life insurance policy in place (32%) compared to any other region. Just 12% of Greater London respondents said they didn’t have a policy. By city, Sheffield had the highest percentage of respondents without life insurance, at 36%, compared to a low of Edinburgh at just 10%.
Of the self-employed, sole-traders, or business owners polled, only 57% said they had life insurance, versus 45% of the rest of the population, meaning they are better protected than employees to protect their family in the event of their death.
As many lenders require life insurance as part of their terms and conditions for lending for a mortgage, many believe it’s a requirement, when in fact it isn’t law. Nearly a third of Brits think you need a policy in place to be accepted for a mortgage with that percentage rising to 40% for millennials. Regionally, this misconception is most accepted as fact in Northern Ireland, with 44% of respondents there believing it to be law.
This report comes as the Financial Conduct Authority’s Financial Lives 2024 – general insurance protection survey – showed policy numbers fell amongst mortgage holders. In 2024, 28% of adults held life insurance – down 1% since 2022. Above average declines were for adults aged 25-44 and for mortgage holders.
