Is Income Protection Worth It?
That’s a great question we get asked all the time by our customers. We all know Income protection insurance is not a compulsory requirement unlike car insurance. It is not a requirement if you wish to obtain a mortgage or to rent a home like buildings/contents insurance.
But, with income protection insurers having to pay a £5bn that is record-breaking claims this past year. We would argue that alongside life insurance and critical illness insurance. It’s a very handy type of insurance to possess indeed!
Recent claims data.
Latest figures from the ABI show that insurers paid out almost £17m each day. This consists of Income Protection, Critical Illness Cover and Life Insurance in 2020. Over 98% of claims received have been paid to policyholders and their families.
The total value of claims paid for critical illness had dipped slightly when compared to 2019 for the first time ever. The average single claim cost increasing to £79,000. It is also important to understand that 96% of cancer claims were also paid. This provides a lifeline to policyholders at probably one of the most difficult of that time period of the life.
A key point to note from the 2020 data is that over 87% of new claims against Income Protection Insurance were paid to policyholders during the pandemic. It is also worth noting that one of the few reasons for policyholders having claims declined was due to non disclosure.
Are there many different types of policy?
Income protection should be treated as a safety net should you lose your job through no fault of your own. Or having an accident or become too sick working for a time.
There are many different types of policy, including mortgage protection, redundancy cover, accident and illness insurance and loan protection. The right one for you will depend on your outgoings, lifestyle and priorities.
In addition to individual claims, the latest figures also show that a record number of families were supported with a financial payment following a group insurance claim.
Policies that offer protection for you
One of the questions people also ask, how many people claim on policies. Almost 5,000 people were helped back to work following a period of sick leave. A further 7,900 were assisted through referrals to help and support. Cancer and mental health issues being among the main causes of claims.
ABI health insurance and protection head Roshani Hewa said: “Protection products offer vital help to families in their time of need. To note that the industry has collectively supported families with more than £5 billion in 2017 for the first time ever is incredibly positive”.
“A severe injury or illness could be devastating but, with insurers paying out on more than 97% of claims, consumers can rest assured that they will have all the help they require if the worst happens.”
