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  • affects 1 in 4 women / 1 in 5 men before retirement
  • 94.1% of the critical illness claims are paid
  • protect yourself and your family if you get seriously ill
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  • get the cover that will pay when you need it
  • save up to 35%, cover from £5 a month
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Insurers: Aviva, Legal & General, Liverpool Victoria, Scottish Widows, Vitality, Zurich

Do critical illness insurers really pay out: A closer look at UK critical illness claims statistics

Good news! According to the Association of British Insurers (ABI), payouts for critical illness claims have been improving over the years. And contrary to what one may think, insurance companies do want to pay out claims.

One good case in point with regards to the improving claims payout rates would be Aviva’s claims statistics. In 2004, it only approved 74% of its claims. In 2007, this increased to 84.7%. By the year 2011, Aviva ‘s paid out claims jumped to 94.1%.

Improving Statistics

  • In 2010, nearly £2 billion was paid out in critical illness claims, with an average payout of £47.166.
  • Based on the 2011 report from the ABI, 170 UK individuals and families get help every day through insurance claims for life, critical illness and income protection claims payments.
  • In 2011, insurers paid out £6.7 million daily in life, critical illness and income protection claims.

Insurance is there to provide a much-needed lifeline during one of the most difficult times in a person’s life – the diagnosis of a critical illness.

In 2005, only about 80% of critical illness claims were approved, with a whopping 20% of the claims either rejected or denied. A bulk of these denials was because:

  • the insured did not disclose pertinent medical information that could have affected how the policy was issued (such as recurrent back pain, chest pains, etc. )
  • the critical illness being claimed for did not meet the definition of the policy

Changing Definitions and Introducing Best Practices

The critical insurance industry landscape has changed over the years. The ABI, in an effort to prevent the growing number of denied claims, has issued the ABI Code of Practice covering Critical illness insurance.

Changing the Definition of TPD

There is now a standard definition for Total Permanent Disability, which was introduced by the ABI. The aim of these new definitions is to make it easier for the clients to understand exactly the circumstances when a claim is valid.

Changing the Definition of “Non-Disclosure”

In the past, claims may be rejected due to a client’s failure to disclose a long-past medical condition they forgot about or the fact that a previous non-smoker decides to smoke. With the Code of Practice, for non-disclosure to be a valid reason to deny a claim, it must show that the information given was deliberately fraudulent or given without any care as to whether it was relevant or correct.

If the client’s nondisclosure covers an innocent mistake (where the policy application questions were unclear, or didn’t ask about the condition), the claim is usually considered payable. If there was negligent non-disclosure, where the client was careless in answering the application form, the insurance company may decide to pay only a portion of the claimed amount, usually depending on how careless the client was when filling up the application form.

With these changes, the payout rates for critical illness have improved. Based on statistics by the Financial Ombudsman Service, complaints covering long-term protection insurance (including Critical Illness insurance) have dropped by 50%.

Here are the 2011 paid critical illness claims statistics for some of the major companies:

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