UK adults estimate that just 47% of individual protection claims are ever paid out, according to a report from Aviva.
However, the insurance company has also revealed that public opinion does not match reality in this case, as it paid out 97% of individual protection claims in 2016.
In its first Aviva Individual Protection Claims Report, Aviva said that it paid out £870 million in claims last year, equating to £2.4 million every day. It paid out 98.9% of life insurance claims to support families through a bereavement or terminal diagnosis, 92.3% of critical illness claims for conditions such as cancer, heart attack and stroke, and 92.6% of income protection claims to help customers get back to work after a health crisis.
The report also aims to raise awareness around the common reasons why a small number of claims are declined, emphasising the importance of consumers carefully checking that correct health and lifestyle information is provided during the application process and that they fully understand the policy’s terms and what it covers.
Aviva has also said that further findings from the research support calls for more education amongst consumers to limit the possibility of any protection claim being declined, as a third (33%) of people said they had not always being entirely frank with insurers when applying for different types of insurance.
More than half of UK adults (53%) also say they do not bother to read the detail on any insurance policies they purchase. A similar proportion (54%) also said they only check their insurance policies’ terms and conditions when they need to claim, increasing the possibility of disappointment if a claim is made for something that is not covered by their particular policy, such as a specific illness.
In another sign that greater education is needed to avoid claims being declined, as many as 45% of UK adults do not think that providing incorrect height or weight data can lead to an individual protection claim being rejected. 25% did not realise this was also true of their drinking and smoking history. Both factors can significantly contribute to the likelihood of developing certain illnesses, such as cancer which was the most common condition for critical illness, life insurance and terminal illness benefit claims in 2016.
Last year Aviva declined around 140 individual protection claims due to customers’ statements about their health and lifestyle during the application not being accurate. Around 400 were declined because the condition being claimed for was not covered by the policy.
Paul Brencher, managing director of individual protection at Aviva said: “It’s a common misconception that insurers don’t pay out on protection claims – but our report shows this simply isn’t true. In the significant majority of cases, a claim will be paid, delivering crucial financial support during what will often be the most difficult period of someone’s life.
“However, claims rates could be even higher if all consumers were aware of the need to take extra care when making an application. Incorrect information, whether deliberate or accidental, and not checking the product details are some of the main reasons why a small proportion of protection claims cannot be paid. Advisers can also help prevent this by stressing the importance of being as thorough and clear as possible when applying for insurance.
“As an industry, we must ensure the pervasive myth that insurers don’t pay out isn’t a barrier to families taking steps to protect themselves against illness or a death.”