In 2014, £3.44bn was paid out by protection insurers to nearly 128,500 customers or families, the ABI has revealed.
This is up from £3.08bn paid out the previous year to help 98,900 individuals or families.
The average individual income protection (IP) policy pay out, which helps those unable to work due to illness or injury, lasted for 204 weeks and was worth £39,200. In 2014, 92.9% of claims were paid out.
The average pay-out in 2014 on a critical illness (CI) insurance policy was £67,000. The percentage of CI insurance claims being paid continues to rise, with 92% paid (up from 80% in 2005). There has been a steady rise in the percentage of claims paid since the introduction of the ABI’s Code of Practice on non-disclosure, first issued in 2008, which clarified which medical information customers needed to share with insurers.
The average pay-out on a term life insurance policy was £60,900 with 98.7% of claims being paid. In 2014, insurers paid out more than £1.5 billion in claims.
For whole life insurance the average claim payment was £7,400 with almost all (99.98%) of claims paid. In total £540 million was paid out in 2014.
Every day, insurers pay out on average £9.4m to help more than 350 individuals and their families. 99.98% of whole life insurance policies are paid out, worth £540m up from £450m in 2013.
James Dalton, ABI director in charge of protection policy, said: “At the most stressful times, insurance can make a real difference. These figures show that 97.7% of all types of protection policy claims are paid allowing people to focus on other challenges. As well as relieving the financial strain, insurance policies can provide support during a difficult time. For example, income protection policies can offer rehabilitation and back to work support services.
“However, many households still have no real financial safety net. Each year, one million workers suddenly find themselves unable to work for more than four weeks due to serious illness or injury.[3] Insurance can play a role in improving families’ financial security, to help them after the loss of a loved one or support them if they are unable to work.”