Research from the ABI (Association of British Insurers) has shown that £1.9bn was paid out by life insurance companies to customers who made life insurance and critical illness insurance claims last year.
Around 40,000 families and individuals made a successful claim in 2010, with an average pay out of £47,166.
ABI’s research indicates that:
· 29,182 life term claims were paid last year, which equates to 98.2% of all term life claims. 534 term life claims were refused.
· 11,161 claims were paid for critical illness, 89.9 percent of claims in 2010. 1,248 claims were refused.
Budget restrictions, perhaps due to the recession, have seen a decrease in the total amount of life insurance being taken out. The ABI believe that people have been cancelling their life insurance policies in order to save money.
The ABI created a guidance policy in 2008 that would ensure customers who applied for life insurance would not be penalised for genuinely accidental non-disclosure of information. The guidelines have seen an increase in customer policies as less people are being rejected.
The Financial Ombudsman Service indicates that the level of long term cover complaints have reduced by 50% since the guidelines have been in place.
Maggie Craig, director of life and savings for ABI has commented on how imperative it is that a person receives life insurance and critical illness cover because the policies work towards “helping people during some of the most difficult times in their lives.”
She emphasizes the importance of customer care by commenting that the "industry continues to work closely with its members to ensure that all claims are handled as quickly and as sensitively as possible."