Insurers paid out more than £6 million every day in 2012 to help families deal with the unexpected impact of job loss, serious illness, injury or a family death.
Would your family be able to cope financially if the worst was to happen to you?
It’s not something people like to think about but new figures highlight the importance of protection insurance to many UK households.
Over the course of last year, 53,000 people received payouts from life, critical illness and income protection policies, according to insurance industry body the Association of British Insurers (ABI).
Total payouts across these three types of protection policies were up 4 per cent on the previous year, its figures show.
Number of declined claims has fallen
An effort by the insurance industry to help reduce the number of claims declined by insurers has contributed towards the rise in payouts, says the ABI.
Across life and critical illness insurance, for example, the total number of rejected claims decreased from 17 per cent in 2006 to 9 per cent in 2012.
Buying life insurance and other protection policies can seem complicated, which is why many insurers have made efforts to help people get to grips with the cover they receive, says the ABI.
Helping people better understand what they can claim for alongside work to help customers grasp the type of information they must provide before they buy has helped the number of declined claims to fall.
Payments provide ‘valuable support’
Stephen Gay, head of life, savings and protection at the ABI, says: "In 2012 insurers paid out more than £6 million every day to help families dealing with the financial impacts of death, serious illness or injury.
"These payments provide valuable support to customers facing very difficult circumstances.
"People often make a claim on protection cover at what can be a very challenging time, so insurers want the claims process to be as smooth and straightforward as possible for their customers.
"This is why we have worked to help people better understand what their policies cover and don’t cover, and improve claims handling in complex cases."
98% of life insurance claims were paid
The ABI figures reveal a payout rate of up to 98 per cent on some protection policies, such as life insurance.
Looking at the figures in more detail, 2012 protection claims payouts included:
- £4 million a day paid out across 28,000 families for life insurance claims, with an average pay-out of £49,000. 98 per cent of claims were paid, up from 97 per cent in the previous year.
- More than 11,700 people received an average of £70,000 from critical illness policies. The equivalent of £2.2 million was paid every day and 91 per cent of claims were paid.
- And 13,200 people received payments from income protection policies, with insurers paying out an average of just over £9,000 per claimant.
Simple and cost effective
Matt Lloyd, head of life insurance at Confused.com, says: "Life insurance is a simple and cost effective way to protect your family in the event of your death.
"These latest figures from the ABI really highlight its importance.
"Without it 28,000 families could have come into financially difficult last year.
"It’s unpleasant thinking about the inevitable but getting a life insurance quote is quick and easy and monthly premiums can be as little as £5 a month*.
"This really is a small price to pay for reassurance that, in the event of your death, your family will be financially secure."
*Price based on a non-smoking, 30 year old insured over 10 years for £100,000 of cover on a decreasing-term policy, postcode CF10 1PZ. Price correct on 30 August 2013.
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