Life insurance – will they pay out?

Will the insurance company actually paying out on your claim? It’s a question that a lot of people at the very least think about when looking at life insurance. Unfortunately, quite a high number of people think that life insurance companies don’t pay out more often than they do.

A recent survey by Drewberry Insurance reveals that most people’s estimates are miles off the mark. So, what are the facts?

Life insurance facts

We’ve all met someone down the pub that knows someone, that knows someone that was refused a pay-out by their life insurance provider. If you have life insurance or critical illness in place, this type of story would be extremely worrying and disturbing to day the least. What’s the point in having life insurance cover in place if the insurer is just gping to avoid paying out in your ‘hour of need’?

But are insurers really so unlikely to avoid paying out on a claim? Most of us seem to think so. The commonly held view is that many claims are avoided by life insurance companies.

As a consequence, many people don’t take out life insurance, critical illness cover or income protection. So, what is the truth when it comes to life insurance?

5 things you didn’t know about life insurance


1, ‘Insurers don’t pay out do they?’

What are the facts about how much do insurers actually pay out? Here are the verified figures.97.2 per cent of claims on protection insurance policies were accepted in 2015.

Over 97 per cent of life insurance claims resulted in a successful claim in 2015 according to the Association of British Insurers (ABI). For certain types of insurance, the figure was even higher. Life insurers paid out on 99.9 per cent of claims made on whole of life policies.

2.  Life Insurers paid out £3.6 billion in claims on protection plans in 2015.

This figure includes life insurance, terminal and critical illness insurance, income protection insurance and total permanent disability insurance.

The money received by claimants of course never brings a loved one back, however the money received, has paid off mortgages, helped people maintain the lifestyle and in the case of Critical Illness and Income Protection policies, has allowed people to rebuild and carry on with their lives.

3. Almost 130,000 customers and families benefited from protection policies in 2015.

Between 2013 and 2015 alone, the number of successful claims increased by over 30 per cent, from 98,927 in 2013 to 129,136 in 2015, according to the ABI.

4. The rate of successful claims is increasing, not decreasing.

In the last 10 years, the percentage of claims resulting in a successful pay-out has increased. Figures from the ABI show that the average claim amount for a critical illness policy increased from just 80 per cent in 2005 to more than 93 per cent in 2015.


The myths about life insurance


People who have been put off from taking out life insurance, due to the stories of life insurance companies not paying out, may be wise to reconsider. Life insurance is an integral part of financial planning as life is full of uncertainty. If the worst should happen, a pay-out from an insurer may well make the difference between having to completely change your life plans, to being able to maintain your current life, even if it is without a loved one


Action Call – Financial Advice

If you are concerned about having the right life insurance in place, talk with your Financial Adviser.

If you would like to talk to about financial planning, please get in touch for a no-obligation meeting. Go to our website and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.

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It is advisable to take advice from a professional financial adviser when making major financial planning decisions.

Check out our other recent articles here

This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.

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