Term Life Insurance Market Definition
The term life insurance market consists of sales of term life insurance products and related services by entities (organizations, sole traders and partnerships). These entities are engaged in initially underwriting (i.e., assuming the risk and assigning premiums) annuities and life insurance policies, disability income insurance policies, dismemberment insurance and accidental death policies
Term life insurance is a type of life insurance which provides only a death benefit (through lump-sum, monthly payment or annuity) to the beneficiary if the person insured dies during a specified term period. If the person insured survives until the end of the term, the coverage ceases without any value (or payments made) and thereafter death claim cannot be made. Term life insurance providers invest premiums to build up a portfolio of financial assets to be used against future claims. Direct insurance providers are entities that are engaged in primary underwriting and assuming the risk of insurance policies.
Term Life Insurance Market Size
The global term life insurance market reached a value of nearly $778.8 billion in 2019, having grown at a compound annual growth rate (CAGR) of 6.87% since 2015, and is expected to grow at a CAGR of 9.67% to nearly $1,126.6 billion by 2023. Also, the market is expected to grow to $1,353.0 billion in 2025 at a CAGR of 9.59% and to $2,217.9 billion in 2030 at a CAGR of 10.39%.
Growth in the historic period resulted from economic growth, and government led insurance reforms. Factors that negatively affected growth in the historic period were lack of awareness, and limited coverage of illness death causes mistrust.
Going forward, growth of middle-class group in emerging market, and increase in chronic diseases and disabilities are expected to drive the market. Factor that could hinder the growth of the term life insurance market in the future include non-investment grade.
Term Life Insurance Market Drivers
The key drivers of the term life insurance market include:
Government Led Insurance Reforms
Government initiatives and efforts towards insurance reforms have had a significant impact on the market, in both developed and developing countries. For instance, In October 2017, the Australian Government announced a number of reforms to private health insurance in the country. It was an effort to make premiums cheaper, increase access to mental healthcare, and encourage younger population to invest in insurance. A premium discount of 2-10% per year was introduced for people belonging to a health fund before turning 30. Similarly, the government of India had launched Pradhan Mantri Jeevan Jyoti Bima Yojana, a term life insurance program, in 2015, which led to increased awareness about the insurance. Rise in government support significantly increased insurance coverage, thereby impacting the market growth during the historic period.
Term Life Insurance Market Restraints
The key restraints on the term life insurance market include:
Lack Of Awareness
Lack of awareness about term life insurance is one of the major restraints in the market. In a study on millennials, led by Max Life Insurance and statistical surveying firm Kantar IMRB, it was discovered that only 44% of millennials know about term insurance and only 17% had taken it. In another study, conducted in the US, it was discovered that majority of people consider term life insurance expensive. According to another survey by LexisNexis Risk Solutions India in 2016, around 76% of the respondents rely on the brokers and agents for information on insurances. Moreover, only 23% of consumers responded that their source of information is an insurance company website indicating that the insurance industry is not in a position to engage the customers with relevant information. The lack of awareness creates ambiguity on pricing and benefits provided by the insurance and obstructs the customers to purchase term life insurance thereby restraining the growth of the market.
Term Life Insurance Market Trends
Major trends influencing the term life insurance market include:
Technologies To Aid Automation Of Insurance
Term life insurance providers are increasingly adopting advance technologies to automate insurance process, reduce cost of operations and improve efficiency. These technologies include artificial intelligence(AI) applications such as robot-advisors, robotic process automation and block chain, a distributed decentralized ledger and underlying technology of bitcoin (a cryptocurrency) not managed by a central authority. These technologies helps in automation of risky and complex processes, provide scope for machine learning, avoid repetitive and time taking processes, provide quick and error-free services, and for secure sending, receiving and storing information. Chatbots are AI-enabled robots used to interact with customers to gain better understanding about the insurance policies and payments. For instance, SPIXI, a chatbot, is an automated insurance agent that customers can interact through a mobile application and Geico, an insurance company’s virtual assistant Kate, a chatbot, answers customer queries on policies and payments. Similarly, in October 2019, Munich Re Automation Solutions Ltd launched an auto-underwriting solution for Allfinanz Spark that helps enhance the customer experience for life insurance that includes term life insurance.
Tailored Insurance For Clients Leading A Healthier Lifestyle
Term life insurance companies are increasingly offering tailored insurance for their healthier clients. Insurance companies globally are offering lower premium rates that reward the client’s healthy lifestyle. These companies are also encouraging policyholders to lead a healthy lifestyle. The willing clients are being rewarded with reduced premiums or certain loyalty benefit programs. For example, Vitality, a UK based insurance company, which offers its clients rewards if they exercise regularly and eat healthy. These clients are also offered discounts on activity trackers and free delivery of healthy food from their partner companies. Other companies such as Max New York Life Insurance offers up to 36% of reduction of premium for their healthy, non-smoking policyholders.
Opportunities And Recommendations In The Term Life Insurance Market
Opportunities – The top growth potential in the term life insurance market by type of insurance will arise in individual level term life insurance market, which will gain $234.38 billion of global annual sales by 2023. The top growth potential in the term life insurance market by type of distribution channel will arise in bancassurance market, which will gain $129.74 billion of global annual sales by 2023. The term life insurance market size will gain the most in China at $214.18 billion.
Recommendations – To take advantage of the opportunities, The Business Research Company recommends the term life insurance companies to offer tailored insurance policies, collaborate with tech startups to offer the best term life insurance policies to the clients, use automation and big data technologies to improve operational efficiencies, expand offerings in emerging markets, provide competitively priced offerings and focus on creating advertising content on digital platforms to increase sales, among other strategies
Term Life Insurance Market Segmentation
The term life insurance market is segmented by type of insurance, by type of distribution channel and by geography.
By Type Of Insurance-
The term life insurance market can be segmented by type of insurance into
The individual level term life insurance market was the largest segment of the term life insurance market, accounting for $600.93 billion or 77.2% of the total market in 2019. The group level term insurance market is expected to be the fastest growing segment going forward at a CAGR of 13.2% during 2019-2023.
- a) Individual Level Term Life Insurance
- b) Group Level Term Life Insurance
- c) Decreasing Term Life Insurance
By Type Of Distribution Channel –
The term life insurance market can be segmented by type of distribution channel into
The tied agents and branches was the largest segment of the term life insurance market by distribution channel, accounting for $256.03 billion or 32.9% of the total market in 2019. The bancassurance market is expected to be the fastest-growing segment going forward at a CAGR of 14.1% during 2019-2023.
- a) Tied Agents And Branches
- b) Brokers
- c) Bancassurance
- d) Direct And Other Channels
The term life insurance market is segmented into
Asia Pacific was the largest region in the term life insurance market, accounting for 49.4% of the global market in 2019. It was followed by North America and Western Europe, and the other regions. Going forward, the fastest growing regions in the term life insurance market will be Eastern Europe and Asia Pacific.
- o North America
- o Western Europe
- o Asia Pacific
- South Korea
- o Eastern Europe
- o South America
- o Middle East
- o Africa
Term Life Insurance Competitive Landscape
Major Competitors are:
Other Competitors Include:
- • MetLife
- • Aegon Life Insurance Company
- • Prudential Financial
- • Northwestern Mutual
- • State Farm
- • MassMutual Life Insurance Company
- • AIG
- • Lincoln National
- • John Hancock USA
- • China Life Insurance Company Limited
- • Bajaj Allianz Life Insurance
- • Life Insurance Corporation of India
- • HDFC Standard Life Insurance
- • ICICI Prudential Life Insurance
- • Kotak Life Insurance
- • Ping An Insurance (Group) of China Ltd.
- • China Pacific Insurance (Group) Company Ltd
- • AXA Life Insurance Co., Ltd.
- • FWD Fuji Life insurance Company, Limited
- • Medicare Life Insurance Co., Ltd.
- • AEGON Sony Life Insurance Co., Ltd.
- • Allianz Life Insurance Japan Ltd.
- • Tokio Marine & Nichido Life Insurance Co., Ltd.
- • Liverpool Victoria
- • Scottish Widows
- • Aviva
- • Royal London
- • SCOR
- • CNP Assurances
- • Poste Vita
- • Standard Life
- • Vitality
- • Generali Assurances
- • Munich Re Insurance Unit Ergo
- • Intesa Sanpaolo Vita
- • Zurich
- • HBOS Financial Services
- • Rosgosstrakh
- • Sogaz Insurance Group
- • AlfaStrakhovanie Group
- • Powszechny Zaklad Ubezpieczen (PZU)
- • UNIQA
- • ASKA Insurance Company
- • Brighthouse Financial (MetLife)
- • Northwestern Mutual
- • New York Life
- • Lincoln National
- • MassMutual
- • John Hancock
- • Transamerica
- • Manulife Financial
- • Great-West Lifeco, Inc.
- • Sun Life Financial
- • IA Financial Group
- • RBC Insurance
- • Empire Life
- • Companhia de seguros aliança do brasil
- • Bradesco Vida E Previdencia S.A
- • AR LIFE
- • MAPFRE Argentina
- • Crecer Seguros
- • Ohio National Seguros de Vida
- • MetLife UAE
- • Alliance Insurance (UAE)
- • Mashreq bank (UAE)
- • Buruj Cooperative Insurance (Saudi Arabia)
- • Al Alamiya (Saudi Arabia)
- • Menora Mivtachim Insurance
- • ABSA Insurance and Financial Advisers (Pty) Limited
- • Industrial and General Insurance Plc (IGI)