Even speaking as people whose business is protection insurance, we will admit that the industry hasn’t always had a great reputation for its willingness to pay out in response to claims. But is that reputation founded in any reality, or do the doubters have a point?
Workers are often cynical about the chances of insurance paying out
Let’s start with the perceptions, and there are some alarming figures out there. One survey undertaken by an insurance company in 2015, for instance, quizzed 2,000 workers on what percentage of Life Insurance claims they believed actually resulted in a successful payout.
The response? People guessed, on average, that a successful payout occurred about 50% of the time. In other words, the general belief was that for every successful life insurance claim, another claim was refused by the insurer.
With that being the perception, we can hardly blame some people for deciding not to purchase life insurance or a similar protection product. After all, what’s the point of buying something that has a 50% chance of not working at the very moment you need it?
But are these negative beliefs about protection insurance well-founded?
As powerful and widespread as the above perception of low payout rates is, it’s really important to underline that it isn’t backed up by the evidence.
In fact, the Association of British Insurers (ABI) revealed last May that in 2020, 98% of all claims arising from protection insurance - defined for these purposes as critical illness cover, life insurance, total permanent disability insurance, whole of life insurance, and income protection insurance - were paid out. This figure was virtually identical to the one for 2019.
And what caused those 2% of refusals? The two main reasons, according to the ABI’s Charlie Campbell, were the non-disclosure of relevant medical information, and the given condition not being covered by the insurance. So, we would urge you to be particularly vigilant about these aspects if you are interested in taking out a protection insurance policy in 2022.
Allow us to point you in the right direction for your own needs
Whether it’s life insurance, critical illness cover, mortgage protection, or another protection insurance product that you would like to buy this year, you will almost certainly appreciate advice and guidance from informed and well-placed people.
By that, we mean people who are committed to finding you the best solution for your needs, instead of the pushy salespeople who also do little or nothing for the insurance industry’s reputation.
Call 0800 316 6917 today, and we will make a UK adviser available to guide you through your options. We provide a completely free quotation service, with no obligation for you to buy.