Auburn mtg

In line with the trends of the last 3-4 years, many insurance companies have announced their claims statistics for critical illness cover.

As a brief reminder, the idea with Critical Illness cover is that it will pay out a lump sum (usually) in the event of diagnosis of a number of serious illnesses.

Critical illness cover is purchased for a variety of reasons, with the main ones being to cover a mortgage loan (both personal and business) and for family protection purposes.

Unlike straightforward life assurance, which pays out on death, critical illness cover includes a great deal of small print that you need to research BEFORE you purchase cover. The QUALITY of the cover is one of the most important elements, not price. Unfortunately, many policyholders purchase on price alone and may be blind to what they are actually covered for.

The acid test comes when you make a claim.

Let’s take a look at some figures from two of the major critical illness providers; Scottish Provident and Legal & General.

Scottish Provident

From January – June 2008:

they paid £51.6m in claims
had 703 claims submitted
87.3% of these claims were successful
the average payout was £73,423
the largest claim value was £552,487
the average age of a claimant was 44
the average time a plan was in force prior to a claim was 73 months
Of the 102 unpaid claims (12.7%):

87 were declined as the illness did not meet Scottish Provident’s critical illness definition
15 were declined due to the discovery of material non-disclosure at the time the plan was taken out
80% of the £51.6m was paid out for claims for cancer, heart attack and stroke. There were 40 claims under children’s benefit, where the payout totalled £782,423.
Under the cancer claims, £8.8m was paid out for breast cancer, £2m for bowel cancer and £1.5m for prostate cancer.

Other successful claims were for benign brain tumour and angioplasty.