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170 Families Helped Every Day By Life Critical Illness And Income Protection Insurance Payouts

Latest figures published today by the ABI highlight the vital role insurance plays in helping customers cope with the financial difficulties that can arise as a result of a death, serious illness or injury. Every day in 2011 insurers paid out £6.7million, split between nearly 170 individuals and families who made claims on life, critical illness and income protection insurance policies.

In 2011:

• The average pay-out on a life insurance policy was £46,000, two and a half times the average annual take-home salary. 97% of life insurance claims were paid. The small number of claims declined was due to fraud or customers failing to disclose relevant medical information to their insurer.

• The average pay-out on a critical illness (CI) insurance policy was £59,000. The number of CI insurance claims being paid continues to rise, with 92% of claims being paid (up from 80% in 2005), as a result of the success of the ABI Code of Practice on non-disclosure. This Code of Practice has resulted in a marked reduction in claims having to be declined due to customers not sharing important medical information with their insurer.

• To reduce the number of declined CI claims still further, the ABI has introduced standard definitions for Total Permanent Disability (TPD) in the Critical Illness Statement of Best Practice. These changes are intended to make it much easier for customers to understand what circumstances qualify as “total permanent disability” and which do not, making it clearer when a claim can be made. The new more descriptive headings and standard definitions of TPD take effect from the end of 2012.

• The average claim in 2011 on income protection (IP) policies was for £14,000 annually, paying out on average for 260 weeks (five years) to help those unable to work. To further increase the number of people who successfully make a claim on their IP policies, the ABI is undertaking a review of the Statement of Best Practice to ensure that the product is as simple as possible and is explained very clearly to ensure customers understand when they can make a claim. This is the first year this data has been collected.

Stephen Gay, the ABI’s Director of Savings and Protection, said:

“The insurance industry pays out £6.7m every day in individual life, critical illness and income protection insurance claims, making a real difference to people’s lives at the most difficult of times.

“Insurance companies want to pay all valid claims. It is important that all insurance policies are clear so that customers are able to understand the circumstances in which they can make a claim. The ABI is always looking at ways to reduce the number of claims that are declined, for example because the customer has not provided all relevant information to their insurer, or has not understood that the claim they want to make is not covered by insurance.”

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Last updated 01/07/2016