Since the introduction of the ABI's Code of Practice on non-disclosure in 2008, there has been a steady rise in the percentage of claims paid.
The code clarifies the medical information the customers need to share with the insurers. The past year saw the protection insurers settling the claims of more than 129,100 customers or families. In total a whopping £ 3.6 bn was paid in individual protection claims, which work out around £10 m a day. Further divided among customers, it works out to around £28,000 per customers, for life insurance, critical illness insurance and income protection claims.
Breaking it down further, it has been calculated that the average individual income policy (IP), pay out was worth £ 40,000 and in 2015 91.2 % of the claims were paid out. This policy helps those who are unable to work due to illness and injury and lasted for more than 4 years. The percentage of claims for the critical insurance (CI) policy is consistently rising each year with 93.1% being paid. The average pay out in 2015 on these policies was £ 66,200.
While 97.2% of the protection covers were paid, the remaining 2.8% were declined claims either as the condition was not covered by the policy or the customer had not disclosed important information while buying the policy. According to the ABI, if one reason for the rise in the payment of claims is the introduction of the Code of Practice, the other could be the introduction of the standard definition for Total Permanent Disability (TPD) in its Critical Statement of Best practices in 2011. Before this there was no such demarcation and no standard definition of what qualified as 'total permanent disability'. This lack of clarity led to claims being made that did not qualify. The introduction of the Statement of Best practices has seen the consequent decline in the refused claims. This trend will continue as all new TDP policies are tested against the industry standards set by the ABI. The Total Permanent Disability claims averaged £ 65,200 with 66.4% of claims paid up from 64.1% in the previous year.
Yvonne Braun, director of Policy, Long-term Savings and Protection at the ABI, said: "Every single day, insurers pay out nearly £10m to support families through difficult times. Insurers want to make it as simple and easy as possible for people to claim, and it's great to see that 97% of these claims are paid."
Quotes shown are for a 40 year old male who doesn’t smoke. Policy is £100,000 life insurance cover for ten years with a fixed premium. Example is for illustrative purposes only and was correct on 21/11/2016.
The most common form of protection, ordinary term life cover pays a lump sum to your family if you die within a certain time-frame. Most policies will also pay-out if you’re diagnosed with a terminal illness and have less than twelve months to live
Critical Illness Cover provides a cash lump sum if you suffer from a range of serious conditions within a set time-frame. The money is normally used to pay the bills and provide financial security while you’re on the road back to health
If something serious happens to stop you working - for months, years, or even for life – you’ll want to know you have financial security and that the bills are paid. Income Protection gives you just that, paying a percentage of your income all the time you’re unable to work.
The NHS is groaning under the weight of the UK obesity crisis and newer, more effective medical treatments for a range of illnesses often aren’t available. Private medical cover makes ‘going private’ much more affordable – giving you access to more treatments, shorter waiting lists, and first-class care.
Most company directors are savvy enough to have life insurance, but very few realise they can save up to 53% by taking advantage of a Relevant Life plan.
Group Life and / or Health Cover is the most cost-effective way to provide peace of mind and financial security for the families of your employees.
Key Person Insurance - often called Key Man Cover - is an insurance policy bought and owned by a business to protect its own interests. Cover is provided in the event that an important staff member is suddenly unable to work through critical illness and/or death.
Shareholder Protection Insurance is designed to give you peace of mind in the event that a shareholder in a Limited Liability Company, a member of a Limited Liability Partnership (LLP), or a partner in a partnership dies or is diagnosed as critically ill.
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