Protection Payouts On The Rise

Recent data has highlighted the importance of protection insurance as it continues to support people in times of need.

In 2024, protection insurers paid out a record £8bn in combined group and individual claims. This means that £21.9m was paid out every day to policyholders suffering from illness, injury or bereavement.

Average payout increasing

Last year, £5.32bn in protection claims was paid out across individual life insurance, income protection and critical illness policies. This is 10% higher than the total value of claims paid in 2023, even though the number of individual claims was broadly the same at 275,000. The average payout increased by 10% to £18,700, up from £17,100 the previous year.

The importance of critical illness cover

Critical illness cover serves as vital protection for those with a serious illness such as cancer, a heart attack or stroke. In 2024, the total value of critical illness claims increased by 5% to £1.3bn. The average claim paid was £67,600 – this is a significant lump sum which helps alleviate the financial burden on policyholders, allowing them to focus on recovery without worrying about money. Cancer remains the leading cause for a critical illness payout, accounting for 62% of all claims. Total payouts for the condition went up by 4% to £812m.

Income protection provided essential support

Income protection makes regular monthly payments if you’re unable to work due to illness or injury.  It is designed to replace some of your income, helping you to cover regular expenses such as your mortgage, bills and other living costs.

Figures show that this form of protection continues to support policyholders across the UK until they return to work, retire or reach the end of their policy term. The value of income protection claims has increased by 16% year-on-year to £204m. The typical payout rose to £10,000, up 6% on the previous year. Musculoskeletal issues such as neck and back pain were the most common reason for an individual income protection claim, representing a third (34%) of claims paid.

High proportion of claims result in payout

Over the last decade, the proportion of new individual claims paid has stayed at 97.9% or above. The main reasons for declined claims were non-disclosure of pre-existing medical conditions at the time of taking out the policy and claims not meeting the policy definitions. It’s therefore essential to be transparent with your insurer about your health and make sure you understand when you will be covered.

Here to help

We can help you choose a policy that is tailored to your needs and meets your budget.

As with all insurance policies, conditions and exclusions will apply. Your home may be repossessed if you do not keep up repayments on your mortgage.

Sources:

Record £8bn paid out in vital protection claims during 2024 | ABI