Majority of consumers underestimate the percentage of protection claims paid
83% of people who purchased protection policies were unaware that providers publish claims statistics.
81% of people believed that the UK protection industry pays out less than 90% of life protection claims each year.
92% of people thought the UK protection industry pays out less than 90% of critical illness protection claims each year.
52% of respondents were surprised to find that protection providers in the UK paid 97%* of all protection claims in 2015.
In addition to this, 81% of people believed that the UK protection industry pays out less than 90% of life protection claims each year. In fact, 52% of people thought this figure was less than 70%. While 92% of consumers thought the industry pays out less than 90% of critical illness protection claims each year, with the majority (58%) of people believing this figure was less than 70%.
More than half (52%) of respondents were surprised to find that protection providers in the UK paid 97%* of all protection claims in 2015.
Respondents had a good grasp of the most common reasons claims aren’t paid, with not meeting the illness definition, providing inaccurate information on applications and claiming for something that’s not included in the policy listed in the top three.
Stephen Crosbie, Protection Director at Aegon UK, said: “Despite the fact that industry payout rates are high, confidence in protection and protection providers continues to be low. The common perception among people that less than 90% of protection claims are paid is concerning and shows that the message that protection claims are being paid, is failing to reach people.
“The reality is that contentious claims are few and far between. Just 3% of all claims are not paid and in the vast majority of cases there is a very clear reason for this. Paying claims is at the heart of what we do. It’s central to our business and as an industry we need to showcase claims statistics and stamp out any lingering doubt that insurers don’t pay legitimate claims.
“Last year we helped more than 1,300 families and businesses with the claims we paid. These people have benefitted from having protection in place, helping them through some of the most traumatic and devastating times in their lives.
“Death and serious illness isn’t something we talk about very openly as a society. Understandably, these experiences can makes people uncomfortable and emotional and reluctant to share their stories about how protection might have helped them through a difficult time. But death and illness is an unfortunate reality and people need to talk about it and be prepared for the unexpected.”
The start of this month saw the introduction of the new Bereavement Support Payment to support families who have lost a spouse. It pays £3,500, plus £350 a month for 18 months, for claimants with dependent children (£2,500 plus £100 a month for other claimants). But prior to this change and on the old bereavement support benefits, families would have received the money to support them until a child turned 18 years old.
Crosbie continues: “From this month grieving families will be worse off in terms of bereavement benefits. People should now be looking to make arrangements beyond the Bereavement Support Payment, as it’s unlikely to provide the financial support needed to maintain their current standard of living should they lose the income from the main breadwinner in the household.
“A simple discussion with a financial adviser to identify their protection needs could give people the peace of mind and confidence that should the unexpected happen to them, they are prepared.”
“Protection claims statistics should form a key part of these conversations, to alleviate any doubt about claims being paid. We can only hope that one day this won’t be necessary and people can focus on the quality, suitability and affordability of the product instead.
“Ultimately, these products are there to help people should anything unexpected happen and people need to trust us to deliver on this promise, which we have shown the majority of the time we do.”
Last month, Aegon UK published claims data which showed a total of £123.4 million was paid in claims for life (including terminal illness), critical illness (CI) and income protection (IP), helping more than 1,300 customers, families and businesses in 2016.
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