Total protection sales fell 2.7 per cent in 2012 but sales of income protection rose 9 per cent over the period, according to Swiss Re.
The provider’s latest term and health watch, published last week, shows protection sales fell from 2,026,374 policies in 2011 to 1,971,074 in 2012.
New sales of income protection products rose 8.7 per cent in 2012 to 120,094, up from 110,472 in 2011.
In total, the number of individual term assurance and term with critical-illness policies suffered a 1 per cent dip in sales in 2012 to 1,473,404, down from 1,488,106 in 2011.
On a standalone basis, there were 946,645 term policies sold in 2012, down 1.8 per cent on the 964,225 sold in 2011. However, term with CI policies increased by 0.5 per cent from 523,881 policies sold in 2011 to 526,759 in 2012.
Mortgage-related term sales increased by 7.9 per cent from 529,045 in 2011 to 571,065 last year. Mortgage-related sales equate to 39.7 per cent of total new term sales with and without CI, up from 36.2 per cent in 2011.
Whole-of-life sales suffered a 14.1 per cent fall in sales year-on-year from 400,682 in 2011 to 344,110 in 2012.
Individual critical-illness sales were up 1.7 per cent, from 551,382 in 2011 to 560,911 in 2012.
Swiss Re market head for UK life and health Sally-Anne Etienne says: “The market has generally remained stable despite quite difficult economic conditions in 2012. The growth in income protection and mortgage-related sales is very promising.
“The mortgage market review will be introduced in 2014 and this is expected to make the advice process more professional, making more people aware that they need to protect their loans.”
Financial advisers and mortgage brokers were responsible for the majority of sales in each product category. In 2012, advisers sold 63.9 per cent of term assurance policies, 58.7 per cent of critical illness policies and 56.5 per cent of income protection polices.
Providers sold 32.7 per cent of term policies, 40.4 per cent of CI policies and 43.5 per cent of IP policies, while internet and telesales accounted for 3.4 per cent, 0.9 per cent and 0.1 per cent of term, CI and IP policies respectively.
The top five providers of term and term and CI policies in 2012 were Legal & General, Aviva, Lloyds Banking Group, Friends Life and Royal London, which includes Bright Grey and Scottish Provident.
For individual CI sales, the top five providers were Legal & General, Lloyds Banking Group, Aviva, Friends Life and Royal London.
The top five providers by IP sales volumes in 2012 were Lloyds, Friends Life, LV=, Aviva and L&G.
The average sum assured in term assurance sales stood at £126,168 in 2012, up 3.7 per cent on the £121,522 average the year before.
On average, annual premiums – including term and term and CI – have risen 3.6 per cent from £363 in 2011 to £376 in 2012.
Highclere Financial Services partner Alan Lakey says: “The overall dip in sales could well be down to a relatively moribund mortgage market and we were in a recession, so if you take into account the economic factors then you can see why numbers might be down a bit.
“It is positive to see income protection sales up. That could be down to friendly societies making inroads with plans where they are taking business other providers are not willing to take, therefore making the cake bigger.”