Why it pays to take out critical illness and life cover

Christina Hoghton
Written By:
Christina Hoghton

The myth that ‘insurers will do anything not to pay’ is belied by exceptional payout records

Scottish Widows paid out more than 99% of life claims in 2016 and 93.2% in critical illness claims. This is an increase of 0.5% and 2.7% respectively on the previous year.

A total of more than £211 million was paid out by the insurer in life and critical illness claims in 2016, an average of more than £4 million per week.

The number of claims paid for life cover was 7,569 and for critical illness it was 2,030, equating to a total of 9,599 individuals and their families being helped to manage the financial and emotional impact of critical illness or death.

Life cover claims

The total amount paid out in life claims was £128.9 million, with £14.45 million paid in terminal illness claims.

Men were paid 60% of all claims, with 40% to women.

Half of all claims from women were as a result of cancer, compared with 34% of men, while heart related claims accounted for 26% of cases for men and 11% of cases for women.

The average policy duration at claim stage was 8.8 years and the average age of people who claimed was 60 years and the average size of term claim paid was £36,749.

Critical illness cover

The total amount paid out in critical illness claims was £82.68 million – 51% to men and 49% to women.

The four main reasons for women making a claim were cancer (76%, of which 52% were due to breast cancer), multiple sclerosis (7%), stroke (5%) and heart attack (5%).

Among men, 55% of claims made were for cancer, 21% for a heart attack and 8% for stroke.

The average size of claim paid was £40,730 and the highest individual claim was £501,721. The average period in force before a claim was 4.75 years and the average age of people who claimed was 50.

Scott Cadger, head of underwriting and claims strategy at Scottish Widows, said: “The most important thing we, as a provider, can do is pay claims. That’s our ‘moment of truth’, and we’re pleased that we’ve been able to provide vital support to each of the 9,599 individuals, and their families, who claimed in 2016.

“As an industry, however, we’re still failing to communicate our strong claims record to consumers.  Many still believe that insurers will try to avoid paying a claim, and this misconception can have long lasting and devastating effects in cases where people choose not to invest in financial protection because they believe it will never pay out.

“This is why our 200 year heritage of paying claims and our extremely strong 2016 statistics are so important to us. Our commitment to helping people at the most difficult and challenging times of their lives continues to drive everything we do.”

Alan Knowles, managing director of Cura Financial Services, added: “The most important part of any insurance is the claim, and customers need to have confidence that their policy will pay out when it’s needed. Many protection insurers have exceptional payout rates and should proudly publish these statistics.

“All advisers will undoubtedly speak to a client at some point who says ‘insurers will do anything not to pay’. Claims statistics like these from Scottish Widows, however, not only prove this to be the total opposite, but also highlight that the financial strength and track record of an insurer can be invaluable in improving customer confidence.”