One of the reasons most often given for not taking out protection insurance is the consumer’s expectation that they wouldn’t be paid out in the event of a claim.
But figures just released by the Association of British Insurers (ABI) shows that simply isn’t so with 97.3% of protection claims being paid out and over 98% of life claims.
The ABI have reported a record payout of £4.7 billion for 2016 – the equivalent of roughly £13 million a day.
Their director of policy, Yvonne Braun, said: “The money is paid out to help customers cope with the difficulties that can arise as a result of a death, serious illness or injury.”
Protection insurance includes products such as life insurance, critical illness cover and income protection, which help families cope with financial strains following a life changing event.
The ABI figures show that 166,692 individuals or families were paid out on their claims last year.
“When a claim is rejected it is usually due either to a condition not being covered by the policy or the customer failing to disclose important information when taking out the policy,” said Ms Braun.
There were just over 28,000 income protection payouts at an average £17,800. The one-off lump sum payout on 15,400 critical illness policies averaged £67,700.
Regarding life insurance – the average payout for 36,800 term life policies was £75,000 with insurers paying out a total of £2.7 billion in claims. Whole of life policies lump sums averaged just over £4,700 with over £407 million being paid out.
ABI assistant director, Raluca Boroianu-Omura, said: “The fact that protection insurance products pays out £13m a day shows how they can help to relieve the financial strain on families following a death, serious illness or injury.
“Insurers deliver on their promise to help individuals and households during a time of great distress, as demonstrated by the fact that over 97% of all protection claims were paid in 2016.
“Serious illness or injury can occur at any time and will inevitably cause strain on families financially, as well as personally. Products such as income protection, life insurance and critical illness cover improve the financial resilience of individuals, households and businesses and give peace of mind.
“Importantly, protection products also relieve financial pressure on the welfare state and the NHS.”
We can help
If you’re not sure what your insurance needs might be our friendly, knowledgeable staff are ready and willing to talk you through the options available and help you find the right policy or policies to suit your needs.
Call us on 0800 103 2613 and we’ll be happy to help.