Life insurance payouts on the increase

Tuesday, May 18, 2010

Recent reports claiming that the life insurance industry has increased payouts will come as welcome news for claimants and policy holders.

Research conducted by statisticians Moneyfacts, showed that an average of over 90 percent of claims were paid out in 2009. They also revealed that Aviva, the UK’s biggest insurer, paid out £118 million on critical illness policies alone in 2009.

The study did, however, pinpoint the discrepancies in how insurers deal with claims, with Legal and General paying out for the highest proportion of claims, as they declined only 6.4 percent of claims whilst Bright Grey and AXA both turned down 7 percent of claims.

In comparison, other insurers such as AEGON, Bupa and Royal Liver did not pay out in around 12-14 percent of occasions.

The study also pointed out that although many people take out life insurance to protect dependants from the death of the families main breadwinner that comes from their mortgage or property purchase, fewer then 30 percent actually hold critical illness insurance against the larger and more likely risk of serious illness damaging the household income.

With progress in medical treatments meaning that people are living longer these days, the financial consequences of time lost to recuperation or loss of earning power can be of great concern, and the general rise in payouts for this form of financial protection would also be a welcome sign.