Income Protection is designed to replace a proportion of your salary if you’re medically unable to work due to any illness or injury.
So long as the policyholder has selected a plan with an ‘Own Occupation’ incapacity definition the Income Protection policy will pay out if they are unable to undertake their current job role.
A claim will start once the policyholder has been unable to work for the length of their deferred period. The deferred period is chosen at the outset of the policy and often ranges from a week up to 6 months.
The successful payout rate for Income Protection insurers is high across the market, hopefully providing reassurance that these plans will pay out in the event that illness or injury means you can’t do your job.
Each year the Association of British Insurers (ABI) publishes average payout rate statistics from across all insurers. The latest figures are from 2018 and show that 88.1% of all Income Protection claims were paid, with almost £650 million paid out in total.
From 2016, the Association of British Insurers is reporting Income Protection claims statistics differently. Previously, insurers included both ongoing and new claims in their payout rates and the sums they paid out each year.
Now only new claims are counted, which has affected the figures when you make a direct comparison to previous years,
The table below shows what proportion of income protection insurance claims were paid by each insurer (that published their payout rates).
As well as nearly every insurer sharing their claims payout data, certain providers now publish annual claims reports, providing detailed information on the common causes of claims, as well as reasons for rejections.
There is still a perception that these insurances don’t pay out, but fortunately the vast majority of claims are successful and provide an invaluable financial safety net for UK households.
Insurers
| 2017
| 2018
| 2019
|
|---|---|---|---|
Aegon
| 96%
| 93%
| 100% |
Zurich
| 87%
| 95%
| 98% |
Vitality
| 96%
| 97.8%
| 96.4% |
Shepherds Friendly
| 96%
| 95.8%
| 96.3% |
Cirencester Friendly
| 94.7%%
| 95.2%
| 95.7% |
Holloway Friendly
| 96%
| 98%
| 94% |
British Friendly
| 92.4%
| 94.7%
| 94% |
Liverpool Victoria
| 96%
| 95%
| 93% |
Royal London
| 92.1%
| 72.2%
| 91.6% |
The Exeter | 91% | 93% | 91% |
Aviva
| 88.8%
| 87.3%
| 85.7% |
Legal & General
| 95%
| 95%
| 82% |
IMPORTANT NOTICE
The above Income Protection Insurance payout statistics shouldn’t be used to make an exact comparison of insurers but rather to get a general understanding of payout rates across insurers as a whole.
Insurers use slightly different criteria for categorising declined claims; for example, some insurers might treat a fraudulent claim as declined, whereas others could have a different way of classing them.
Given this, the above table isn’t a simple measure of whether which insurer offers the best Income Protection Insurance. One insurer might have better policy wording or could be more suited to you. That’s why it’s helpful to get advice from someone who knows the market and providers inside out.
When considering income protection insurance, above all you’ll want to ensure that your selected insurer will pay the benefit you’re entitled to in the event of a genuine claim, being there when you need the financial support the most.
However, on top of claims data you’ll also want to know that you’ve chosen the best Income Protection for you as an individual, including finding an insurer that will be most suitable for your circumstances such as your medical history and general health and lifestyle.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.
I had a great experience with Drewberry, they have a lot of knowledge and expertise with life insurance and income protection and were able to advise me and arrange suitable products. Highly recommend.
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