Term Insurance Market Size to Attin USD 4 Trillion by 2033

The global term insurance market size reached USD 1.73 trillion in 2023 and is anticipated to hit around USD 4 trillion by 2033, growing at a CAGR of 8.75% from 2024 to 2033.

Term Insurance Market Size 2024 to 2033

Key Takeaways

Asia-Pacific has contributed more than 34% of market share in 2023.
Europe is estimated to expand the fastest CAGR between 2024 and 2033.
By type, in 2023, the individual-level term life insurance segment has held the highest market share of 76%.
By type, the group-level term insurance segment is anticipated to witness rapid growth at a significant CAGR during the projected period.
By distribution channel, the tied agents & branches segment has held 53% market share in 2023.
By distribution channel, the light brokers segment is anticipated to witness rapid growth over the projected period.

The term insurance market plays a crucial role in the insurance industry by providing financial protection to individuals and families against the risk of premature death. Unlike other types of life insurance, term insurance offers coverage for a specific period, typically ranging from 5 to 30 years, at a fixed premium rate. This market segment caters to individuals seeking affordable and straightforward life insurance solutions without cash value accumulation or investment components.

Growth Factors

Several factors contribute to the growth of the term insurance market globally. Firstly, increasing awareness about the importance of financial planning and risk management drives demand for life insurance products, including term insurance, among individuals and households. Additionally, demographic trends such as population growth, urbanization, and rising disposable incomes in emerging economies fuel the expansion of the market. Moreover, advancements in technology and distribution channels, such as online platforms and digital underwriting processes, streamline the purchase and servicing of term insurance policies, making them more accessible to consumers.

Region Insights

The term insurance market exhibits varying dynamics across different regions of the world. In mature insurance markets like North America and Europe, term insurance remains a popular choice among consumers seeking affordable coverage for specific needs, such as mortgage protection or income replacement. In contrast, emerging markets in Asia-Pacific and Latin America witness robust growth in the term insurance segment, driven by increasing middle-class populations, rising awareness about financial protection, and expanding distribution networks. Additionally, regulatory reforms and government initiatives to promote insurance penetration further contribute to market expansion in these regions.

Term Insurance Market Dynamics

Drivers:

Several drivers propel the growth of the term insurance market globally. One key driver is the increasing recognition of term insurance as a cost-effective way to secure financial protection for loved ones and dependents in the event of the policyholder's death. Moreover, the flexibility offered by term insurance policies, such as the ability to customize coverage amounts and duration based on individual needs, attracts a wide range of consumers across different age groups and income levels. Additionally, the growing popularity of term insurance as a component of comprehensive financial planning strategies drives demand among millennials and young professionals seeking to safeguard their financial future.

Opportunities

The term insurance market presents numerous opportunities for insurers to innovate and expand their product offerings to cater to evolving consumer needs and preferences. For instance, the introduction of riders and add-on benefits, such as critical illness coverage, accidental death benefits, and disability riders, enhances the value proposition of term insurance policies and attracts a broader customer base. Furthermore, partnerships with financial institutions, employers, and digital platforms enable insurers to reach untapped market segments and streamline the distribution process. Additionally, leveraging data analytics and artificial intelligence technologies can improve underwriting efficiency, risk assessment, and customer engagement, thereby enhancing the competitiveness of insurers in the term insurance market.

Challenges

Despite its growth potential, the term insurance market faces several challenges that impact its development and profitability. One significant challenge is the low persistency rates associated with term insurance policies, as policyholders often lapse or surrender their policies before the end of the term. This not only results in revenue loss for insurers but also raises concerns about the adequacy of coverage for policyholders and their beneficiaries. Moreover, pricing pressures and competition from alternative insurance products, such as permanent life insurance and group insurance schemes, pose challenges to insurers operating in the term insurance market. Additionally, regulatory compliance, particularly in emerging markets with evolving insurance frameworks, adds complexity and cost to insurers' operations, affecting their ability to expand and innovate in the term insurance segment.

Recent Developments

In December 2023, The Smart Total Elite Protection Plan, a comprehensive term life insurance policy created to fit modern lifestyles, was unveiled by Max Life Insurance Company. This plan provides broad coverage that is tailored to changing customer needs.
In June 2023, after receiving an IRDAI license in just two weeks, Go Digit Life Insurance Limited, a life insurance company supported by modern technology, started operations. In order to "Make insurance simple," the "Digit Life Group Term Insurance" plan will prioritize providing high customizability to its clients, or groups.
In May 2023, The American mutual life insurer New York Life debuted a broad selection of affordably cost term life insurance products. These services increase the return on clients' investments in protection while preparing them for opportunities and financial uncertainty.