Insurers supported record numbers of claimants through bereavements, illness and injuries last year with protection payouts, figures show.
The insurance industry paid a record of more than £5.3 billion in protection claims in 2018 – a £200 million increase year-on-year, the Association of British Insurers (ABI) and Group Risk Development (GRiD) said.
The number of claims paid also surpassed 200,000 for the first time, at 202,738.
The figures include claims covering critical illness, permanent disability, income protection and life insurance.
The payout total equals around £14.5 million being paid for such claims every day.
The percentage of new claims paid out overall was 97.6%, ranging from 70.2% of new total permanent disability claims to 99.98% of new whole of life insurance claims.
Total permanent disability claims can be designed for a specific set of circumstances where the claimant is deemed to be completely unable to work for the rest of their life.
Therefore, some people may find their claim would be more suited to a critical illness claim, or an income protection claim, due to the nature of their circumstances.
Average life insurance payouts reached £81,000 last year – the highest average on record, the ABI said.
The ABI recently launched a calculator to help people understand their financial exposure to income shocks caused by being left unable to work after falling ill or being injured at www.abi.org.uk/percy.
Roshani Hewa, assistant director, head of health and protection at the ABI, said: “The growing size of a typical life insurance claim shows how much of a difference such cover can have, and the potential difficulties families without it might face.
“Falling ill or being injured can be traumatic, especially if you find yourself unable to work.”
Here is the total value of protection claims paid in 2018 and the average value:
– Critical illness (Cover pays out when the policyholder is diagnosed with a specified illness. Cancer is the most common cause of a claim), £1,166,872,000, £70,925.83
– Term life insurance (Covers policyholders for a specified number of years, usually until retirement age. Payouts are commonly used to cover outstanding mortgage payments, if the policyholder dies unexpectedly or prematurely), £2,882,604,000, £81,268.78
– Total permanent disability (Pays out the policyholder if they become permanently disabled), £36,781,000, £77,271.01
– Whole of life insurance (Covers policyholders until the day they die. It allows the policyholder to build a small pot of savings to use to cover funeral costs, or to leave a small inheritance to family members), £577,453,000, £4,740.14
– Income protection (Helps fill income gaps when a person is unable to work due to illness or injury. It will usually cover a percentage of the policyholder’s salary and will often provide support services to help employees back into work), £648,815,000, £22,058.45