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Protection sales rose 13% in 2016

Protection sales rose 13% in 2016

Sales in the protection market grew by 13.9 per cent in 2016 with sales of £521m, up from the 2015 total of £457.3m, according to Equifax Touchstone.

The data, which is collated from more than 90 product providers with inputs from more than 11,000 advisers, shows term assurance accounted for 38.7 per cent of protection sales in 2016, while mortgage term assurance accounted for 16.5 per cent.

While overall sales improved in 2016, the last quarter of 2016 saw lower sales compared to the previous three months.

For October to December £131.5m of cover was sold, down from £139.3m in the third quarter. 

John Driscoll, director at Equifax Touchstone, said: “Protection volumes fell in the later part of 2016 due to mortgage market declines in the third and fourth quarters.

"However, in a year of political upheaval, with Brexit and the US elections, the protection market as a whole remained strong and saw continued growth for the year.”

Oliver Bailey, an independent financial adviser based in New Malden in London, attributed the increase in protection sales to the high number of interest-only mortgages coming to an end with no endowments.

Mr Bailey said: "They have had to remortgage and go to a repayment mortgage and change the life assurance with it."

While 600,000 interest-only borrowers will see their mortgages mature before 2020, just under half are expected to have a shortfall due to factors such as a reliance on property price growth, which has slowed in recent years.

As a result, some people may have to resort to selling and downsizing their family home or raiding their savings or pension pots, despite having good incomes.