May 1, 2023
One of the most frequent conversations we have with our clients is about protecting their income or wealth (or both) if they become seriously ill.
If you, or anyone else in your household whose income is relied on, were unable to work – whether for a short time or permanently – what impact would that have? As well as the potential physical impact, what about the financial discomfort?
Everyone’s circumstances are different, of course, but research shows that illness and injury have a significant financial impact, and can add quite a bit to monthly expenses. Macmillan, the UK’s leading cancer support specialists, have calculated, for example, that 83% of people with cancer in the UK find that there’s a financial aspect to their diagnosis – resulting in an average of £891 a month additional spending1. That can be anything from travel expenses, the much-reviled hospital parking charges to additional electricity bills for running medical equipment at home.
Let’s get one thing straight. At Talis IFA, we’re not in the business of scaring you into taking out costly and unnecessary insurance policies. Looking across the market, there’s a huge range of different policies available – from critical illness cover to income protection. Finding the right policy to protect you, at the right price, can be a daunting prospect but we’re here to help.
If you’re considering taking out any kind of financial protection, we’ll start by looking at what you’ve already got in place (if anything), discuss your needs and concerns, and take it from there. We’ll never recommend anything you don’t need (you might have very good cover in place already) and we’ll do our best to ensure that whatever we recommend is appropriate to your circumstances.
Of the claims that do get rejected each year, the majority, no matter which insurer, result from the client having given inaccurate information, regarding pre-existing or excluded conditions. We’ll help you avoid any misunderstandings.
Interestingly, some recent research suggests there is a general perception that insurers do their best not to pay out.
A report from AMI7 reveals that consumers believe that on average, just 72% of life insurance and 60% of income protection claims are paid out.
The reality is quite different. We took a look at some 2022 claims statistics from a range of insurers. Here are the numbers:
| Total individual protection claims (including life, critical illness and income protection) | % paid out in 2022 | Total amount paid out in 2022 | Highest payment | No of claims paid |
| LV=2 | 95% | £127m | +£400k | 8,000 |
| Aviva3 | 98.3% | >£1 bn | Not available | 50,000 |
| Cirencester Friendly5 | 95.4% | £8.5m | £48,859 | 1,348 |
| Holloway Friendly6 | 93.4% | £3.8m
|
Not available | 663 |
| Life insurance | % paid out in 2022 | Total amount paid out in 2022 | Highest payment to date | No of claims paid |
| LV=2 | 97% | £80m | Not available | 5,433 |
| Aviva3 | 99.4% | £683m | Not available | 41,000 |
| Income Protection | % paid out in 2022 | Total amount paid out in 2022 | Highest payment to date | No of claims paid |
| LV=2 | 92% | £15m | Not available | 1,000 |
| Aviva3 | 94.3% | £50m | Not available | 3,680 |
| Exeter4 | 92% | £9.9m | 500,000 | 1,229 |
| Critical illness (including children’s benefit and total permanent disability) | % paid out in 2022 | Total amount paid out in 2022£ | Highest payment to date | No of claims paid |
| LV=2 | 88% | £28m | 364 | |
| Aviva3 | 93.5% | £334m | 4,690 |
Although just a small sample of the insurers out there in the market, these figures do suggest that the percentage of claims paid out exceeds 90% across the range of individual protection products available.
According to the survey results, many people simply don’t believe that their brokers have their best interests at heart when recommending personal protection policies.
One reason is cost, but another could be that consumers also don’t always feel comfortable discussing their physical and mental health with their broker in order to find the policy best suited to their needs. Almost a fifth (18%) of consumers say that they don’t feel confident having these conversations.
That’s one of the reasons why, at Talis IFA, we put the effort into building comfortable, trusted relationships with our clients. We genuinely care about giving you the advice that’s going to be best for you – whether that’s investment or insurance.
To start the conversation click here to find a Talis IFA.
Sources
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