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Protection Pay-Outs Rise Again

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    Protection pay-outs for bereavement, illness and injury claims reached £6.8bn in 2021, a second consecutive yearly high. 

    The record-breaking figure means that, on average, more than £18.6m was paid out every day in life insurance, income protection and critical illness claims. In another turbulent year, protection continued to provide crucial support to millions of people.

    Bigger pay-outs

    This is the third year in a row where the overall average individual pay-out has increased, rising by 9% year-on-year to reach £14,994.

    Specifically, for term assurance, the average claim payment was £61,944, roughly in line with 2020’s figure. Likewise, the average critical illness claim payment was little changed from a year earlier at £67,500.

    Claims paid

    98% of individual and group claims were paid in 2021, highlighting the widespread support provided by protection policies.

    Once again, ‘non-disclosure’ was the main reason for an individual protection claim being rejected. This occurs when a customer falls to provide information about something that might have influenced the insurer’s decision to provide cover or the price of that cover.

    COVID effect

    2021 was, of course, significantly impacted by the pandemic. In times of turbulence, the importance of protection policies come into even sharper relief.

    Indeed, pay-outs for COVID-19 related individual claims almost dubbed in 2021, reaching a total of £261m. The increase was driven mostly by the 69% increase in term assurance claims.

    Ups and downs

    One especially noteworthy trend in 2021 was the 40% rise in claims for musculoskeletal conditions, which, analysts suggest, could be linked to the higher number of people working from home in unsuitable work environments.

    In contrast, there were 20% fewer claims relating to mental health in 2021. Despite the drop, mental health claims remain above their 2019 level, showing how protection policies continue to support people throughout the pandemic.

    More than a number

    Term life insurance pays a lump sum to cover costs if the policyholder dies unexpectedly or prematurely; income protection supports you if you are unable to work due to illness or injury, while critical illness cover pays out if you are diagnosed with a specified illness.

    All three provide vital protection for you and your family, making sure you can meet financial commitments and giving you the peace of mind that your loved ones will not face hardship. Behind the headline facts are millions of families given support when they needed it most. 

    Get in touch

    Whatever your circumstances, we can help you find a suitable policy within your budget. Get in touch today!

    As well all insurance policies, conditions and exclusions will apply


     1 Association of British Insurers (ABI) and GRiD

    Andrew Simmonds

    Andrew Simmonds

    Andrew Simmonds is the managing director at Simmonds Mortgage Services. He's been providing mortgage advice to home owners for many years.

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