Income protection claims statistics

Income protection claims statistics

20 Jan 2022

We get it - you don’t want to buy an insurance policy without being reassured that your money won’t be wasted. We’ve all heard the horror stories about people left without their insurance payout when they needed it most. 

Income protection is one of those policies designed to protect you when things seem impossible. It’s designed to fill an income gap when you’re unable to work due to illness or injury. Naturally, if you were too sick or injured to work and needed to rely on insurance, you’d be up the creek without a paddle if your policy then didn’t pay out. 

However, the good news is that the insurance industry actually pays out on a very large percentage of claims. You can trust that if you are honest when you buy your insurance policy that it will almost certainly protect you how the policy terms set out. 

But don’t trust us just because we said so - trust the figures! 

How many policies pay out? 

The latest figures from the Association of British Insurers (ABI) show that a record amount was paid out on life insurance, income protection and critical illness claims in 2020. Across the industry, £6.2 billion was paid out over the year - that’s the equivalent of £17 million a day.  

It’s not just that record amounts of money are being paid out though. 98% of claims2 across the industry were paid out in 2020, with some insurers1 reporting that their approval rate for claims soared more than 20% higher  than ever before.

Charlie Campbell, the manager for health and protection at the ABI said that the record amount of money paid out shows how insurance can give “vital financial support” to customers during a stressful and difficult time. He also stated that the high percentage of claims paid should “give people confidence they can trust their insurance provider will be there when they need them.”2

What are the statistics for Income Protection claims?  

More than 85% of claims2 on Income protection policies were paid out in 2020, that was a total of 27,281 income protection claims paid in the UK alone. The average value of each pay out was a grand total of £22,170. In total, across the UK in 2020 £688,256 was paid out on income protection claims. 

If you’re still worried your claim may not be accepted and you’ll be left without a pay out, let us ease your mind even further! 

The most common reason for declining individual claims was non-disclosure. This means that if you are honest when you buy your policy about your health and lifestyle, it’s unlikely your claim will be denied. Another reason income protection claims are denied is that an insurer deems a claimant is still fit to work. Being signed off from work by a doctor can help avoid this. 

Charlie Campbell also mentioned this, stating that “non-disclosure and the condition not being covered were the two main reasons” for the claims that were denied. He went on to say that this emphasises the need for customers to disclose any and all relevant health information, even if they are worried this will increase the price of their premiums. However, he also said that it’s important for insurers to continue working on improving “clarity and understanding of what is and is not covered.”2

What are the most common income protection claims?

The most common income protection claim was for musculoskeletal injuries and conditions. This is usually the case, as having a severe physical condition can make work impossible for many.

Musculoskeletal conditions aren’t the only thing you can claim for though. Each insurer is different but they have a full list of conditions covered that you can look through or speak to us here at LifeSearch and we can help. Some existing conditions may be excluded at the point of buying the policy so naturally wouldn't be covered but this will all be made clear. You just need to answer any questions honestly.

However, one thing many people worry about finding cover for is mental health conditions. It can be scary to take time off from work to look after your mind, as there is a huge stigma around mental health conditions. The good news is that the insurance industry is starting to catch up. The ABI has recently launched a mental health training platform (developed alongside mental health experts) to train thousands of insurance advisers and front-line insurance staff to better engage and work alongside customers with mental health conditions. This means that being covered for mental health issues is more and more common and accessible. In fact, in 2020, 12% of income protection claims were based on mental health conditions2.

How can I make sure my claim will be approved?

The best way to make sure your claim will be approved is to be honest and disclose anything that could be relevant. If it’s found that you weren’t honest, the best you can hope for is your claim being rejected. You could also find that your policy gets cancelled though, and you don’t receive any of the money back that you have paid in. 

The other important thing to do is to understand your policy. However, we know it can be tricky to navigate all the insurance terms and mumbo jumbo. That’s why going through an adviser, like us here at LifeSearch, can really help you. We’re here to help make getting insurance easier for you. We pride ourselves on protecting families and helping them live the lives they love. So if you’re worried about getting insurance and you need someone to help you through the ins and outs of it, get in touch with us. We offer fee-free, friendly advice to help you get covered the way you want to be covered.  

Sources:

https://www.zurich.co.uk/media-centre/zurich-protection-claims-payments-up-23-percent-in-2020

https://www.abi.org.uk/news/news-articles/2021/05/record-amount-paid-out-to-help-families-cope-with-bereavement-ill-health-and-injury/

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