Do insurers pay out
Financial products are sometimes at their most valuable when protecting our families, incomes, property or business. Though some people think Insurers don’t pay out.
Insuring ourselves against undesirable events such as sickness or even death may not be pleasant to think about.
The benefit of setting financial issues aside at an emotionally difficult time cannot be overlooked.
Considering the pandemic and the anguish it has brought to families who have suffered loss or illness. Having a life assurance or sickness policy to provide peace of mind in turbulent times is invaluable and far outweighs the cost of premiums.
Several Insurers have recently released their claims figures, which help to challenge the notion that insurers don’t pay out. Of course, there is only one definition of death! And, rarely, a life policy does not pay out on death.
The Association of British Insurers (ABI)
The ABI has recently disclosed that people experiencing bereavement, illness, and injury have been supported with £6.85 billion in insurance payouts.
Covid-related claims plummet by 64%
Individual covid claims plummeted by 64%, from 10,606 in 2021 to 3,846 in 2022. They now only represent 1.3% of the total number of all protection claims paid.
Fewer covid-related claims also led to an almost 73% drop in total value to £71 million. The average payout for each claim also fell by 29% to £17,434.
Claims acceptance rates remain at around 98%
The number of new individual claims paid has remained consistent at around 98% since 2017. In over half of the declined claims, customers had not told their insurer critical details about themselves or their circumstances when they took out the policy.
ABI Head of Protection and Health Rebecca Deegan said:
“When you suffer a loss, fall ill or are badly injured, the last thing you want to be worrying about is your finances. Especially during a cost of living crisis. That’s why the security that protection products can provide is so important. With another year of bumper figures and the vast majority of these claims being paid, it’s encouraging to see that individuals and their families continue to be supported through insurance.” Read more here
One major Insurer, Scottish Widows, recently said they paid out £199 million in claims across protection, critical illness, income protection and life insurance in 2022, with 98% of claims paid out.
Insurance companies paid out £86 million in critical illness claims, with the top three claims being for breast, bowel, and prostate cancer.
The UK’s largest mutual insurance company paid out £631m in claims, with 99.4% of claims paid.
The average age for a death claim payout was 60, and for critical illness, the age was 51.
Legal & General
Total claims announced by L&G amounted to £883 million, up £85.76 million compared with claims paid in 2021, with Covid-19 falling out of the top five reasons for life insurance claims.
Cancer, heart and neurological conditions were the most common claim causes for life insurance, and Legal & General paid out an average of over £2.4m retail protection claims a day in 2022, providing £883 million to 17,768 claims across life insurance, income protection and critical/terminal illness products.
Of course, there are times when Insurers do not pay out, such as Misrepresentation, when a customer needs to share crucial medical history or lifestyle information.
Or policy definitions: An example would be a critical illness claim for stroke that some Insurers may decline if the customer did not suffer any permanent neurological damage and insurers’ underwriting criteria do differ.
When reviewing your protection needs, you should always seek Independent advice from an FCA Authorised and Regulated firm.
As Spectrum are Independent, we don’t have any ties or links with any Insurance Company, and we can help you find the right solution for your circumstances.