Ever wondered how often your insurer pays out?

With negative stories in the media about insurers refusing to pay claims, you may be wondering whether your existing life, critical illness or income protection insurance policies will actually pay out if needed.

Or, if you haven’t yet bought cover, you may be wondering whether it is actually worth it.

Certainly, some recent coverage – The BBC’s Watchdog programme and an article in The Guardian, for example, seems to suggest that you may have cause for concern as to whether a claim would be accepted.

So, what is the solution?

There is a very real need for having suitable protection in place – in fact statistics reveal that 20% of us Brits are likely to go on long term sick leave during our working lives*.

Most of us would be unable to survive on government income (around £5,200 a year) and that is why policies such as income protection and critical illness insurance exist.

Yet, disparaging media coverage on protection insurance claims payout rates could mean that people decide to forgo buying these essential products, leaving themselves and their families vulnerable to financial distress should illness (or even premature death) occur.

For example, independent research** shows that on average, people believe that only 50% of life insurance claims were paid out by the top life insurers. In fact, the average payout rate across these insurance companies was around 98% of all claims made.

Confidence in claims payout rates

The good news is that an innovative protection claims tool has been launched which should provide reassurance and confidence in claims payout rates. Users can view and compare insurance claims payout rates by product and / or by a specific insurer for life insurance, income protection and critical illness insurance.

The data has been compiled using information from some of the UK’s most well-known insurers including Legal & General, Aviva, British Friendly, Liverpool Victoria and Zurich Insurance, following a campaign by the Income Protection Task Force (IPTF) which encouraged all the major insurers to disclose their payout rates.

This insurance claims payout tool is free to use and is designed to help you make an informed and assured decision whether you already hold life, critical illness or income protection cover or are considering it.

So why are claims rejected?

While this tool does reinforce the fact that the majority of claims are paid out and should provide peace of mind to policy holders or those considering buying insurance, you may be wondering why some claims are rejected.

In the rare case that a claim is declined by the insurer, it is usually down to something not having been disclosed on the original application form. This could be something such as a pre-existing medical condition or an undisclosed illness that has a bearing on the claim – and is not due to an insurer simply trying to avoid paying you.

Provided you complete your application honestly, then you should not have a problem getting paid in the event of a claim.

*Source: Drewberry Insurance

**Insurance Survey 2013

Comments are closed.