Financial products are sometimes at their most useful when they are protecting our families, our incomes our property or business. Whilst insuring ourselves against undesirable events such as sickness or even death, may not be a pleasant thing to think about, the benefit of being able to set financial issues aside at emotionally difficult time cannot be overlooked.
When you consider the Covid Pandemic and the anguish that this has brought to families who have suffered loss or illness, having the peace of mind in knowing that a Life Assurance or Sickness policy will pay out in turbulent times cannot be underestimated and goes way beyond what ever premium has been paid.
Several Insurers have in recent days released their claims figures, which helps to often challenge the notion that insurance companies do not pay out. Of course, there is only one definition of death! And it is rare that a life policy does not pay out on death.
The Association of British Insurers (ABI)
The ABI has recently disclosed figures that Insurers have paid out £202 million, that is the equivalent of £553,000 every day – to support the families of people who tragically died due to COVID-19 in 2020.
Yvonne Braun, the ABI’s Director of Long-Term Savings and Protection, said “No one will have been affected by the pandemic more than the families of those who have tragically died due to Covid. While no amount of money can ever replace a life, insurers have and continue to do everything they possibly can to help families cope financially through these distressing and worrying times”
One major Insurer Zurich recently said they paid out ‘£353.7million in protection claims across critical illness, income protection and life insurance’ in 2020, this is a 23% increase from 2019. However, interestingly critical illness polices dropped by £12m and Zurich considers the possibility of fewer people having access to medical advice and diagnosis because of the pandemic.
Additionally, another long-established Insurer LV, said “LV protection claim payouts hit almost £118 million in 2020’ and they paid 95% of all individual protection claims”, stating they paid nearly ‘£14.6 million in income protection’ and 15% of this accounted for mental health claims, unfortunately they expect mental health claims to rise over the next 12 months. In comparison to this, Zurich stated they paid £6.6 million in income protection, 27% of this was for mental health claims.
Clearly Covid-19 has impacted insurance claims, notably the increase in mental health claims have been another unfortunate knock on effect of the pandemic.
The UK’s largest mutual Insurance & Pension company announced they paid £13.1 million for Covid-19 claims in 2020 helping the families of more than 2,100 customers. In addition to paying claims, customers dealing with the long-term effects of Covid-19 are also able to get support through Royal London’s Helping Hand scheme
Craig Paterson, Chief Underwriter at Royal London, said “Despite 2020 being an unpredictable year, we continued to pay claims promptly and support our customers through Covid-19. The pandemic has shown the importance of having protection in place and despite having to make changes to our underwriting and playing our part in avoiding putting additional strain on the NHS, we have offered cover to the majority of new applicants”
“We also recognise that, while receiving a pay-out can help to ease the financial strain of bereavement, money can’t always ease the emotional strain. Our Helping Hand service offered through protection policies bought through a financial adviser is available to customers and their families, so they can receive all the practical help and emotional support they need to help them through this difficult time.”
Of course, there are times when Insurers do not pay out such as Misrepresentation: when a customer does not share important medical history or lifestyle information.
Or policy definitions: An example would be a critical illness claim for stroke that may be declined with some Insurers, if the customer did not suffer any permanent neurological damage and insurers underwriting criteria does differ.
When reviewing your protection needs you should always seek Independent advice from an FCA Authorised and Regulated firm.
As Spectrum are Independent, we have no ties or links with any Insurance Company, and we can help you find the right solution for your individual circumstances.