Payouts by the protection insurance industry have reached record levels, with more than £5bn being paid to bereaved families and ill and injured workers.
With nearly 98% of claims being met and the number of payments passing the 200,000 mark for the first time, payouts totalling £14.5m were paid every single day in 2018. The total of £5.3bn also represented a £200m year-on-year increase in payouts to life insurance, critical illness and income protection customers.
In life insurance claims, the average payout under term life insurance policies reached a record £81,000. More than 35,000 families and beneficiaries were supported following a bereavement, with payouts totalling £2.9bn. A further 121,822 whole of life insurance claims - 99.98% of those made - were paid out, to the tune of an additional £577,453.
The new figures were released this month by the Association of British Insurers (ABI) and Group Risk Development (GRiD) and reassure individuals and families at risk of financial shock. Protection insurances are designed to take away financial pressures should a policyholder become ill or injured or be made involuntary redundant, as well as helping to protect loved ones when an insured person passes away.
In 2018, more than 16,000 critical illness payouts were made, providing, on average, more than £70,900 to each claimant and totalling £1,166,872. Cancer continued to be the highest cause of critical illness claims, accounting for 63%.
Nearly 500 claims were met for total permanent disability, with an average claim value of £77,271, while more than 25,800 income protection payouts provided policyholders with an average sum of £22,058. Musculoskeletal conditions were the reason for almost a third - 30% - of income protection claims.
ABI assistant director Roshani Hewa said: “It’s good to know that families going through some of the worst times, such as dealing with a loss, serious injury or illness, are at least getting more support from insurance products than ever before. The growing size of a typical life insurance claim shows how much of a difference such cover can have, and the potential difficulties families without it might face.
“Falling ill or being injured can be traumatic, especially if you find yourself unable to work. Protection insurance is there to ease the financial burden, so it’s heartening to see the levels of protection showing such positive growth, particularly considering the excellent mental health support many products provide.”
At ActiveQuote, we’re seeing changing trends among customers coming to us for life cover quotes, with an increase in over-55s taking out life insurance. We’ve also seen a slight narrowing of the gap between men and women taking out life cover. The new research shows that, far from what some people believe, the vast majority of protection insurance claims are met. To bust more life insurance myths, read our guide!