Life Insurance, Income Protection & Critical Illness Claims Statistics Ireland | 2016 Edition

What are the most important questions to ask about life insurance?

Maybe….

• How much am I covered for?
• How long am I covered for?
• How much will my life insurance cost?

If you have read our FAQ, you might also ask

• Is there a conversion option?
• What serious illnesses are covered?
• Does my price increase every year?

All great questions.

But you’ve forgotten the most important question of all.

Will the life insurer pay my claim or try to wriggle out.

Maybe you’re too nice to ask such a direct question?

That’s ok, in this article I’ll review in detail the claims experience of:

• New Ireland
• Aviva
• Irish Life
• Friends First

I will touch on Zurich Life as they haven’t verified their 2016 claims stats, I just know how much they paid out,which isn’t a great help to be honest.

I’ll have to leave Royal London aside as their claims for Ireland aren’t available yet…on the 17th May…5 months after the year ended…like c’mon!

Life Insurance Claims Statistics Ireland | 2016 Edition

New Ireland

As you can see from my stats on where we placed our business last year, New Ireland came in joint 4th, which they weren’t best pleased about.

In fairness to them, credit where it’s due and all that malarkey, they are number 1 when it comes to transparency of claims.

Some of the others could take note (I’m looking at you Zurich, Royal London and Friends First)

You see, they issue a claims brochure – publicly available here (it’s worth having a nose through) – detailing a breakdown of all their claims for the year.

Simple, clear and no shenanigans.

Plus it made life easy for me as I didn’t have to harangue the claims department to get my hands on their claims stats.

Before I go any further, take a guess at what % of life, critical illness and income protection claims New Ireland paid.

While you chew on that, let me share with you a survey carried out by Pacific Life Re in the UK.

They asked 2000 adults:

What percentage of life insurance claims do you think are paid out?

The most common answer was 71-80%.

I think most sane adults (those who don’t listen to Joe Duffy) would guess around 70 or 80%.

In fact, the percentage of claims paid is much higher

There were only 4 claims declined for life insurance and 1125 paid.

The declined claims were due to non-disclosure of medical information.

In a nutshell, if you don’t lie on your application form, your claim will pay out.

They paid 360 specified illness claims and declined 49.

Specified illness claims will always have a higher decline figure for one simple reason.

Sometime people send in a serious illness claim form in hope more than expectation of a payout.

Brokers typically take the view

Ah sure send it in and see how you get on, the worst that can happen is a decline

So people with minor health issues send in a claim which is then denied and impacts the claims stats.

34 of New Ireland’s 49 declines fell into this “definition of serious illness not met” category.

Another 8 were declined for non-disclosure.

While 7 more claimants had an illness but it was an illness that wasn’t covered under their policy.

Irish Life

Kudos to Irish Life, they also publish their 2016 claims statistics, you can find them here.

Even better, they give a breakdown of their claims from 2011-2016.

But unlike New Ireland, they don’t publish how much they paid in income protection. Sad face.

Let’s look at their 2016 claims:

Again, great claims stats and their reasons for decline are the same as New Ireland:

• definition not met
• no disclosure
• illness not covered

To be clear, those 3 reasons are the only reasons a claim is declined.

The eye opener for me was how certain illnesses are more common depending on gender.

75% of female claims were for malignant cancer (making  cancer only cover a good, lower cost option for females) compared with 50% of male claims.

While heart related conditions accounted for over five times as many male claims as female claims.

Aviva

Are the above claims paid percentages higher than you expected?

The shocking stat from the Aviva claims was in relation to cancer.

You may think serious illness only affects elderly people.

You’d be wrong.

• The average age of a prostate cancer claimant was 55.
• The average age of a breast cancer claimant was 46.

You’re never to young to buy serious illness cover, in fact leaving it too late is your biggest risk.

Friends First

Friends First are the market leaders when it comes to income protection but I was surprised to see they paid out 4 times more in claims than New Ireland.

€39,000,000 in income protection claims alone last year.

That’s why I have no qualms in recommending Friends First for income protection, they have more experience in paying claims than the competition.

For me income protection is the most important policy you can buy so you’ve got to be confident the insurer will pay your claim.

Some interesting stats from Friends First income protection claims:

• Youngest claimant was 27
• Oldest claimant was 64
• 46% of claimants were under 50 (!)
• 78% of the claimants had been accepted at the normal price (i.e had no serious pre-existing conditions)
• Women are on average 45 when they need to claim (27% claimed within 3 years of taking out the policy)
• Men are on average 50 when they need to claim (24% needed to claim within 5 years of the policy)

As you can see females make more claims then males and claim earlier in their policies.

This is why income protection is more expensive for females.

Friends First paid 90% of income protection claims last year but, interestingly (well to me anyway!) one of the reasons for declining was because the claimant returned to work before the end of their deferred period.

You see, with income protection, you must be unable to work for a certain period of time (the deferred period). You must be out of work continuously for the deferred period before your policy will pay out.

But what happens is, clients put in a claim as soon as they are out of work even though they are miles away from their deferred period.

Let me give you an example:

Johnny has a deferred period of 13 weeks.

He is unable to work for two weeks due to back pain and expects to be out for longer than 13 weeks.

As he should, he puts in a claim.

Friends First accept the claim but before the 13 weeks is up, Johnny makes a recovery and is back to work.

Friends have to record this as a decline, even though they would have paid out had Johnny been out of work for over 13 weeks.

Do you get me?

Good!

Now, let’s look at Zurich Life.

Zurich Life

Not much from Zurich I’m afraid as regards percentage of claims paid.

But I know how much the paid out.

• amount of life insurance paid in 2016 – €38m
• amount of critical illness paid in 2016 – €17m

I’m often asked how long it takes an insurer to settle a serious illness claim?

Zurich settled 94% of serious illness claims within 6 months.

Again there is a big divide between what females claim for compared to males.

A massive 89% of all female serious illness claims were cancer related.

Males accounted for 25% of all heart related claims.

Royal London

I have some UK stats but I’ll wait until they release their Irish stats.

For now…

Over to you…

I hope I’ve shown that life insurance providers are in the business of paying claims.

Because if they didn’t pay claims, there would be no reason for you to take out life insurance.

That’s not to say they’re like your favourite uncle who would have a few at a wedding and throw fivers at you.

Oh no, if they smell blatant non-disclosure, they will fight the claim.

But if you’re truthful on your application and you meet the definition of a claim, you are 100% protected.

Rest easy knowing you’re in good hands.

Let me know if I can help with anything.

Give me a quick outline using the form below or call me on 05793 20836

Nick McGowan
lion.ie | making life insurance easier.