If you’re thinking about taking out life insurance, we understand that you may have concerns about the likelihood of a successful payout if you, or your family, ever had to make a claim. We’ve all heard the horror stories, but thankfully these are very few and far between and that’s why the industry publishes its claims figures every year – to bust the myths.

Figures released by the Association of British Insurers (ABI) and Group Risk Development (GRiD) earlier this year show that the insurance industry paid out a record £5 billion in protection claims in 2017 – representing an increase of more than £340 million year-on-year.

Overall, virtually all protection insurance claims were paid in 2017.

Protection insurers paid out nearly £14 million every day through products such as income protection, critical illness or life insurance. The ABI says that these products are vital to helping people to get back on their feet following an injury, illness or bereavement.

Roshani Hewa, Assistant Director, Head of Health and Protection at the ABI, says:

“Protection products provide vital financial support in people’s time of need. To see that the industry has collectively supported families with more than £5 billion in 2017 for the first time ever is incredibly positive.

“A serious injury or illness can be traumatic, but with insurers paying out on claims, consumers can rest assured that they’ll have the support they need if the worst happens.”

One of the UK’s largest insurers, Aviva, paid more than £525 million to the families of life insurance customers who had died or to customers diagnosed with a terminal illness last year. £337 million was paid out to customers diagnosed with critical illness, and more than £38 million of benefits were paid to customers with income protection cover or fracture claim benefits.

Their statistics reveal that more than 25,000 customers and their families benefited from life, critical illness and income protection insurance policies during 2017.  This includes more than 16,000 customers claiming for life and terminal illness, more than 4,000 claiming for a critical illness and more than 4,000 income protection and fracture cover claims.

Robert Morrison, Aviva Global Chief Underwriter, Health and Protection

"Our claims data shows the sheer scale of the vital financial support that we provide to customers and their families, helping them at some of the most difficult times of their lives. Last year saw our biggest ever payout of £900 million, making a real difference to the financial well-being of more than 25,000 customers and their families.

“We know that consumers are doubtful and worry that insurers don’t pay claims but these figures and the wider protection industry’s claims data show that this is simply not true”.

The other major providers paint a similar picture, in 2017, Royal London paid out a staggering £517m to 34,573 customers and their families – with £206.3 million being paid for critical illness claims alone. Scottish Widows recently published their figures for 2017 and they too paid out on almost all life insurance claims, an astonishing £129.4 million to almost 7,500 claimants. And Legal and General have paid over £313 million to 9,004 of their life insurance customers.

When might life insurance not pay out?

The bottom line is that it is unusual for a life insurance claim to be rejected, as insurance industry-supported figures reveal, virtually all protection insurance claims were paid in 2017.

For the tiny proportion of life cover claims that are declined there are two main reasons: fraud and a lack of disclosure when taking the policy out.

Fraud occurs when someone makes a fake life insurance claim. It’s usually a deliberate act by the policyholder who is not, in fact, deceased or terminally ill. You might remember the story of the ‘canoe widow’ that hit the headlines a few years ago. Fraud accounts for some of the insurers’ declined claims, but assuming your family is making a genuine claim this isn’t anything to worry about.

Another small proportion of life insurance claims are declined due to a lack of disclosure. An insurance contract is a "contract of utmost good faith", which means that all parties to the contract are under a strict duty to deal fully and frankly with each other. Customers must disclose all facts that are "material" (or relevant) to the risk for which they are seeking cover. This problem can easily be avoided by being honest and forthright when you take out the policy. When you apply for life insurance through Essential Insurance, we’ll run through your options and your application to get your policy in place.  We know that our customers take out cover to give both themselves and their families peace of mind. Our aim is to help ensure that if the worst did happen, that your family is protected, and if a claim is made, that it is accepted. We do this by helping our customers with their application form and emphasising the importance of answering all questions fully and accurately.

If you would like help and advice, or you want to discuss the merits of different types of policy with one of our protection advisors, please don’t hesitate to give us a call on 0800 612 8005.