By Ian Lewis
Just 3% of life, critical illness and income protection insurance claims were declined last year with some £3.1 billion paid out to almost 100,000 customers, according to new figures.
The numbers from the Association of British Insurers (ABI) show that during 2013, a total of 99.9% of whole life insurance claims were paid. The total paid out was £449 million with the average payment £10,300.
When it came to term life insurance policies, 98.4% of claims were paid with an average pay-out of £51,500 adding up to a total of £1.3 billion.
Meanwhile, individual income protection policies were paying out for an average of 230 weeks with the typical claim last year worth £11,500.
92% of critical illness claims paid out
The ABI says the pay-out rate in other categories has increased since it introduced a Code of Practice on non-disclosure in 2008 - clarifying what medical information customers should tell insurers about - and the Critical Illness Statement of Best Practice three years ago.
Just under 92% of critical illness claims were paid out, compared to a rate of only 80% nine years ago, with an average pay-out of £60,400, the ABI figures show.
Almost two-thirds (62.2%) of total permanent disability claims were paid last year, compared to 50% in 2009.
Helen White, the association's head of protection, said: "The insurance industry pays out £8.4 million every day in individual life, critical illness and income protection insurance claims, making a real difference to people's lives at some of the most difficult of times with 97% of all claims paid in 2013.
ABI Code of Practice
"At the most stressful times, insurers want to make it as simple and easy as possible for people to claim.
"Industry initiatives such as the ABI's Code of Practice on non-disclosure have led to a fall in the percentage of claims declined from 8% in 2007, as customers have become much more aware of which information they need to share with their insurer.
"It is encouraging to see this has resulted in a continuing fall in the percentage of claims that are declined.
"Insurers are committed to helping consumers make informed decisions about which protection insurance product is right for them and how to avoid having a claim declined."