An average of £8.4m was paid out every day in 2013 by the UK individual protection industry, according to new figures.
The payments covered life, critical-illness and income protection claims, according to the Association of British Insurers.
A total of £3.1bn was paid out in the year to around 99,000 families, with 98.4% of all life insurance claims paid out – worth £1.3bn of that total.
The average term life insurance claim totalled £51,500, while whole life claims averaged £10,300 and paid out in 99.9% of cases.
Across the industry, this type of claim paid out £449m in 2013, although the vast majority of claims came from income protection cases.
Some 91% of all claims were these types of cases, paying out 12,004 claims at an average payout of £11,500, paying out for 230 weeks.
As a result, the total payout from income protection claims in 2013 totalled £138m, with the largest average payouts for total permanent disability.
These claims were paid in 62% of cases in 2013 at a average of £66,700 per claim – some £28m was paid out in this fashion.
Why people chose income protection
Income protection is designed to protect people from unexpected events that might compromise their ability to earn money.
Accidents and serious injury can potentially prevent people working for a considerable period of time, so it is important that people can afford to live during that time.
This requires people who want cover to divulge a certain level of information, as Helen White, the ABI’s head if protection explains.
“Industry initiatives such as the ABI’s code of practice on non-disclosure have led to a fall in the percentage of claims declined, from 8% in 2007, as customers have become much more aware of which information they need to share with their insurer,” she said.
“It is encouraging to see this has resulted in a continuing fall in the percentage of claims declined; insurers are committed to helping consumers make informed decisions about which protection insurance product is right for them and about how to avoid having them declined.”
Those requiring payouts from protection claims still need to keep a watchful eye on their finances until they are able to earn again.
Financial management is extremely important, so keeping spending in check with a prepaid card is a great way of ensuring that you don’t spend more than you would like.
A prepaid card limits spending to the amount on the card at any given moment and is not directly linked to a bank account, ultimately making funds safer.
The cards can easily be topped up or replaced if required, while accounts can be checked regularly online if needed.