2021 Financial Protection Insurance Claims Statistics
Income protection.
Life insurance.
Specified illness cover.
All forms of Financial Protection.
Financial Protection is the cornerstone of any effective financial plan.
However, that’s not to say it doesn’t come without it’s challenges.
Some of the most common myths I hear about financial protection:
“It never pays out”
“Insurance companies try all they can to not pay”.
So, do insurance companies pay claims?
Following the recent release of 2021 claims statistics, it’d be good to debunk this myth.
We’ll also dig a little deeper into the nuts and bolts of the numbers.
Income Protection
Let’s start with the most important policy of all, income protection.
This can be labelled a ‘living financial protection benefit’ in that you claim and you are still alive to pick it up.
You must protect your income in the event of illness or injury.
It’s your most important asset.
Looking at Aviva, one of the main providers of this cover with the most comprehensive product.
Aviva paid €46m in income protection in claims over 92% of claims submitted.
This was over 2,000 claims and the average claim period just 5 years.
The average age at claim was 48 with the youngest claimant being a 22 year old male.
The top three reasons for income protection claim in 2021 were:
- Psychological (mental health)
- Orthopaedic
- Cancer
Now for the % of claims declined.
2.5% were for non-disclosure by the claimant and 1% were due to pre-existing exclusions.
92% of claims paid is undoubtedly a high rate.
Let’s also look at Irish Life.
Irish Life paid nearly €59m over nearly 3,000 claims in 2021.
Moreover, the top three reasons for claim being:
- Mental health
- Cancer
- Muscoskeletal
Clearly, a key takeaway here being that from two of the top providers in the country, the main reason for an income protection claim payment is psychological issues.
This definitely debunks another myth that income protection only covers physical illnesses.
Life Insurance
Life insurance is predominantly used to replace our future income for our family should we suffer an early mortality.
We’ll look initially at Aviva.
Aviva paid €50.5 million over 408 claims in 2021.
This was 96% of all life claims submitted.
Cancer is the number one reason for a life insurance claim, followed by cardiovascular.
Moving to Irish Life who paid €113m over 1,770 life insurance claims.
The top reason for claim again being cancer.
Looking at Zurich, again the number one reason for life insurance claims was cancer.
However, one of the main points, a 96% payment rate of claims admitted to Aviva.
An extremely high hit rate for an insurance cover that ‘never pays out’.
Specified Illness Cover
Another living benefit much like income protection.
However, in my experience, this product is met with the highest level of scepticism.
Specified Illness Cover essentially pays you a lump sum.
Once you are diagnosed with a specified illness.
Importantly, the diagnosis has to match that covered by the definitions within the policy.
This is where the scepticism grows from.
Using Aviva, 80% of specified illness claims in 2021 were paid.
Clearly a reduction on the 92% and 96% for income protection and life insurance.
The main reason for a specified illness claim with both Aviva and Irish Life was cancer.
Similar situation with Zurich, cancer being the main cause of claim.
Irish Life paid a total of €49m in claims with the average age of the claimants being 55.
The average age of Zurich’s claimants was 52.
Whilst a reduced admittance rate versus both income protection and life insurance, it’s still significant.
Summary
Do life insurance companies pay financial protection claims?
First and foremost, I can’t promise they will, simply because I don’t assess the claim!
However, I can give you my opinion.
Based on my experience, evidence and the annual claims statistics provided.
The leading providers are comfortable providing their statistics because they’re really good.
So, in my opinion, more than likely, once you’re completely honest, yes, the chances are they’ll pay.
The one that causes most issues is specified illness cover.
Mostly due to the definitions of the illness in the policy conditions.
I am also certain life companies are not out to reject claims.
That I’m confident of.
At the proposal stage, a proposer has to be open and honest.
That’s all life companies ask.
Once you are open and honest, it’s unlikely you’ll have an issue should a claim situation arise.
How We Help
As mentioned earlier, financial protection without a doubt is the cornerstone of anyone’s financial plan.
Rule number one of financial planning: ‘Protect what you have and your most important asset’.
We create financial protection arrangements for clients on a weekly basis.
Our process ensures our clients are recommended an appropriate level of cover for them.
Not over insured and not under insured.
Importantly, then we work back to affordability, what our clients can afford.
If there are any tax advantages available to you, we ensure they are utilised.
We will also ensure all proposal forms are completed and encourage you to disclose all relevant information.
Taking some extra time at the proposal stage can reduce the issues of any complications down the line.
Get in Touch
Schedule your financial protection review.
Or even if you just want to talk some things through.
We cover the expense of an initial meeting.
Drop me an email, francis@fortitudefp.ie or request a callback.
You can also give me a call on 086 0080 756 or access our diary here and book a call at your convenience.
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