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If you think insurers don’t pay out, you’re wrong. Here are the statistics to prove it

If you think insurers don’t pay out, you’re wrong. Here are the statistics to prove it

Jun 9, 2022

One of the commonly held myths about insurers is that “they don’t pay out”.

Indeed, research by Scottish Widows found that just 7% of people think that between 91% and 100% of life insurance claims are paid (the actual figure is in the mid-90s).

Worryingly, just 1 in 50 people think that between 91% and 100% of critical illness claims are paid out (the actual figure is just over 90%).

When it comes to life insurance, Critical Illness cover, and income protection, the truth is that insurers pay the overwhelming majority of claims. Hundreds of thousands of families benefit from payouts every year, providing financial support when Brits need it most.

To prove that you can rely on your financial protection, we’ve analysed the claims data of nine of the UK’s leading insurers. Read on to see how firms like Aviva, Legal & General, and LV= pay the vast majority of claims.

 

Aviva

Aviva are one of the UK’s leading insurers – so it’s perhaps no surprise that they are leading the way when it comes to paying claims.

In 2021, Aviva settled 98% of all claims received, paying a total of 53,713 claims across individual Critical Illness cover, life insurance and income protection. 

The insurer paid the equivalent of £3 million every day in 2021, paying a total of over £1 billion to customers for the second consecutive year.

 

Life insurance

Aviva paid an incredible 99.4% of all life insurance claims in 2021. A total of 43,954 life insurance claims were paid, totalling £732 million. 

Cancer was the most common reason for a life insurance claim across all age bands over 30.

 

Critical Illness cover

The insurer also paid 4,367 Critical Illness claims, totalling £310 million. With an average payout of £70,917, a third of all claimants were aged in their 40s, with 42.9% aged between 50 and 59.

 

Income protection

The average age of Aviva’s 4,300 income protection claims was just 44 years old. Total payments were £51 million, and the average duration of a claim was 7 years and 5 months.

Aviva say that one of their longest-running income protection claims paid throughout 2021, ran for more than 37 years.

It started only a short time after a customer took out the policy while they were still in their 20s. Over that time, the insurer has supported the customer with payments totalling approximately £200,000.

Source: Aviva

 

Legal & General

In 2021, Legal & General paid out over £797 million in protection claims and supported 16,890 customers.

This included 1,579 Covid related claims. The insurer paid more than £73 million of valid life insurance claims where Covid-19 was an attributing factor.

 

Life insurance

Legal & General paid 98% of all life insurance claims in 2021, totalling more than £478 million. The average payout was £38,585 and the average length of policy at the time of claim was just eight years.

The youngest claimant was just 23 years old, with the eldest claimant aged 107. Almost a third of all life insurance claims were due to cancer, followed by heart-related issues and Covid-19.

 

Critical Illness cover

The insurer paid 93% of all Critical Illness claims in 2021, totalling almost £210 million. The average family received support of £72,473 with the youngest claimant aged just 24.

Most claims – almost 2 in 3 – were for cancer, followed by heart-related issues and stroke.

In addition, Legal & General paid 144 children’s Critical Illness claims. With a claims rate of 99%, families received an average payout of £18,987 with the youngest claimant just a day old.

 

Income protection

In 2021, Legal & General paid 417 new and continuing income protection claims, totalling more than £3 million.

Policyholders received, on average, more than £1,000 a month in support. The average policy was in place for just two years before a claim.

Just over a third of claims were for musculoskeletal issues, followed by cancer and Covid-19.

Source: Legal & General

 

LV=

Popular insurer LV= paid 96% of all claims in 2021. Individual protection claims hit a record £119 million with the provider supporting more than 9,000 claimants.

 

Life insurance

Life insurance claims (including terminal illness and 50+ claims) totalled almost £74 million in 2021. This supported 6,677 families and their loved ones. 

The top causes for claims were cancer (39%), Covid-19 (16%) and heart-related conditions (15%).

 

Critical Illness cover

LV= paid out more than £28 million in Critical Illness claims in 2021 to 362 individuals and families. 

Cancer accounted for 3 in 5 of all critical illness claims, followed by heart attack (11%) and stroke (8%). The highest individual payout was £449,982. 

 

Income protection

LV= paid £13.6 million in income protection claims to nearly 1,000 individuals and families. 

Musculoskeletal issues, fractures, and cancer represented nearly 6 in 10 of all income protection claims. 

Source: LV=

 

Royal London

Royal London begin their claims report by saying “through pandemics and daily life, we’re committed to paying claims and you can rely on us to be here when it really matters.”

That was certainly true in 2021, with the insurer paying 99.5% of all claims, providing £632 million of financial support when people needed it most.

 

Life insurance

Royal London paid 96% of all term life insurance claims, totalling £146.6 million. The average claim was £79,569 and the average age of the claimant was 60.

This includes £16.5 million paid in term life insurance for 217 Covid-19 claims.

 

Critical Illness cover

In line with other insurers, Royal London paid more than 9 in 10 Critical Illness claims. In 2021 they paid 91.7% of claims paid totalling £136 million. 

The average payout was £70,228 and the average age of claimant was 51.

89% of claims in 2021 were for just five definitions – cancer, heart attack, stroke, multiple sclerosis, and benign brain tumour.

In addition, the insurer supported 102 families during a difficult time, paying £2.3 million in children’s Critical Illness claims with an average payout of £22,731.

 

Income protection

Royal London paid a total of £4.1 million in income protection claims in 2021. They paid 90.4% of all claims (including those already being paid at the start of 2021 that they continued to pay throughout 2021).

The average age of an income protection claimant was just 38, and the average paid to individuals was £4,952. Claimants had, on average, only had their plan in force for 3 years and 5 months before making a claim.

The three most common reasons for an income protection claim were musculoskeletal problems, cancer, and mental illness.

Source: Royal London

 

Scottish Widows

In 2021, Scottish Widows paid 98% of all claims, supporting 10,426 families with payouts totalling £207.9 million. The insurers paid £821,772 every working day.

 

Life insurance

Scottish Widows paid a staggering 99% of all life insurance claims in 2021, totalling £132.9 million.

They paid a total of 9,035 claims, and almost a third of life insurance claims were for cancer.

 

Critical Illness cover

The insurer paid the overwhelming majority of Critical Illness claims in 2021. Across the 12 months they paid 1,391 claims, equivalent to 93% of all claims received. A total of £74.9 million was paid.

49% of all claims by men were for cancer, with 15% for heart attack and 9% for stroke. For women, 77% of claims were for cancer, with 4% for heart attack and 4% for stroke.

Source: Scottish Widows

 

Aegon

In 2021, Aegon paid more than £139 million in claims, helping 1,693 families and businesses.

 

Life insurance

Aegon paid 95% of all life protection claims in 2021. Over the past three years, they have paid, on average, 96%.

The insurer paid a total of £76.7 million of life protection claims with an average claim value of £79,314. The highest life protection paid was for £2.75 million for a brain tumour.

Cancer was the most common reason for a claim, accounting for 34% of claims. The average age of an insured person at the time of claim was 63 years old.

 

Critical Illness cover

Over the last three years Aegon have paid an average of 93% of Critical Illness claims. They paid the same percentage in 2021.

Overall, the insurer paid a total of £34.5 million for Critical Illness claims with an average claim value of £79,071. The highest claim paid was for £936,312 to a customer diagnosed with cancer.

61% of all Critical Illness cover claims in 2021 were for cancer, followed by heart attack and stroke.

 

Income protection

In 2021, Aegon paid 90% of income protection claims. Over the past three years, they have paid, on average, 94% of claims.

The average age of an insured person at the time of an income protection claim was 48 years old. Cancer and mental health were the most common reasons for a claim.

Source: Aegon

 

Zurich

Unlike the other providers, Zurich have only published their claims figures for the first six months of 2021.

During that period, the insurer paid more than £222 million in life, Critical Illness and income protection claims to customers and their families.

 

Life insurance

In the first half of 2021, Zurich paid £167.8 million in life insurance claims, equivalent to 99% of all claims made.

£18.1 million of these claims were paid due to death from Covid-19.

 

Critical Illness cover

When it comes to Critical Illness cover, Zurich paid 91% of claims in the first half of 2021. Payouts totalled more than £50.7 million and have increased by nearly 20% on the same period in 2020.

Overall, 2 in 5 claims (41%) were for cancer, followed by heart attack and stroke. Breast cancer alone accounted for 14% of Critical Illness claims with the average age of claimants being just 32.

In addition, Aegon paid more than £354,000 in children’s Critical Illness claims in the first six months of 2021. The main cause of children’s Critical Illness claims was leukaemia, with cancer accounting for more than half of the claims paid.

 

Income protection

The insurer paid £2.9 million in income protection claims in the first half of 2021. This accounted for 99% of all claims.

The main reason for claims was for cancer and musculoskeletal disorders, followed by mental health issues.

Source: Zurich

 

Vitality

Vitality have yet to publish their protection claims statistics for 2021, so the most recent figures are for 2020. During the year they paid a record £91.6 million in claims.

 

Life insurance

In 2020, Vitality paid £61.9 million of life insurance claims. The highest payout was for more than £8 million while the youngest adult claimant was just 21 years old.

The insurer reports that 9% of life cover claims in 2020 were Covid-19 related.

 

Critical Illness cover

Branded as “Serious Illness cover”, Vitality paid £29 million of claims in 2020. The highest payout was £628,000 and the oldest claimant received a payout for cancer aged 74.

Cancer was the most common reason for a claim for both men and women and more than a third of all claims were made by people in their 40s.

 

Income protection

Vitality paid almost 97% of all income protection claims in 2020, totalling £557,000.

The average age of a claimant was 42 years old, and more than 9 in 10 claims were for cancer, mental health, and musculoskeletal issues.

Source: Vitality

 

AIG

AIG are another provider who have not published detailed figures for 2021.

In 2020, the insurer paid a total of £115.3 million to 3,188 families, individuals, and businesses.

 

Why do insurers not pay a handful of claims?

While insurers pay the overwhelming majority of individual protection claims, not all claimants receive a payout.

There are typically four reasons for this:

  • Failure to disclose information (often not declaring existing medical conditions or accurate alcohol usage) during the application
  • A customer had stopped paying their premiums and a claim was made after the policy had lapsed
  • Misrepresentation and fraud
  • Not meeting definitions of the policy. For example, an illness may not meet the minimum threshold for payment, or a customer takes their own life within the first 12 months of their plan.

If you complete your application honestly, your premiums are up to date, and your claim meets the definitions of your policy, an insurer will almost always pay your claim.

 

Get in touch

The right protection ensures you and your family receive financial support at the time you need it most. And, as you have read, insurers pay the overwhelming majority of all claims.

 

We can help you to find the right cover for you. Get a life insurance quote online now, search for Critical Illness cover, or get in touch with one of our experts to find out more.

 

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