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Covid 19 and Life Insurance Claims

As we all know, the last year has been dominated by the coronavirus outbreak and the impact that has had on all our lives as a result of coronavirus. A staggering 127,000 have lost their lives in the UK alone at the time of me writing this. On top of that, 100,000’s of more people have suffered from Covid 19 and its long term effects.

So how has Covid 19 impacted life insurance claims?

Insurers have recently published their life insurance claims for 2020 and how they have been impacted by Covid 19. ABI (Association of British Insurers) figures released recently show a total of £202million was paid out in life insurance claims related to Covid 19 over the past year. More details included:
  •       96% of individual claims were paid out
  •       99% of group claims were paid out
  •       The average payout on individual policies was £13,100
The ABI was clear to point out that there had been no major delays in paying claims throughout the pandemic and stated that valid claims “are being processed as quickly as possible”. What are the claims stats from the individual insurance companies? Here at The Insurance Surgery we have over 20 insurers with us being whole of market. This allows us to search the market for our customers to find them the best price for their individual circumstances. Therefore we place our customers with many different insurers. We thought it interesting to take a look at how those different insurers have fared on the claims front in 2020:

Legal and General

Legal and General are one of our biggest partners here at The Insurance Surgery and we have been working with them for over 10 years to get cover in place for our customers. The headlines from their recently reported claims stats include:
  •       £39million paid out in Covid 19 related death claims in 2020.
  •       One in ten of their total death claims during 2020 were due to coronavirus.
  •       They paid out 99% of their death claims which totalled on average £32,287 per claim.
  •       Interestingly, L&G stated that there was a 2% drop in cancer critical illness claims compared to the previous year. Potentially impacted by Covid 19’s impact on the NHS.

AEGON

AEGON have been a partner of ours for many years and their recent claims stats made for interesting reading. The major headline being a 17% rise in life claims during 2020 compared to 2019. Other highlights included:
  •       Cancer being the most common cause of death for a life claim (made up 40% of all claims).
  •       Respiratory-related death claims doubled from 2019 to 2020. Evidently showing the impact of Covid 19.
  •       Like L&G, there was also a drop in critical illness claims (14% from 2019). The burdening of the NHS during Covid 19 was stated as a reason for this in AEGONs report.

Zurich

Another well-known name in the world of insurance. Zurich feature on our panel here at The Insurance Surgery and they have just released their numbers relating to claims in 2020.
  •       Overall protection claims grew 23% year on year.
  •       Life insurance claims related to Covid 19 were valued at £20million, with £15million having already been paid out.
  •       The average age of claimants was 78 and the youngest claim just 34.
  •       The gender split of claimants: Women 35% and Men 65%

LV

LV have been on The Insurance Surgery’s panel of insurers for many years now and are a well known insurance brand across the UK. Their recent report showed:
  •       They paid out on more than 1400 pandemic related claims
  •       A total payout of £12.1million on those 1400 claims.

Why might a life insurance claim not pay out?

You will notice from the above that there are a small % of claims with insurers that aren’t paid out for one reason or another when a claim is made. So why might this happen? There are some snippets from the reports which give us some examples:
  •       Zurich: A customer was insured for 100k following a straight forward medical application stating no previous medical problems. In 2020, a claim was made by the customer’s family as the customer had died of multiple organ failure. However, medical records showed the customer had suffered a previous stroke, had raised blood pressure and cholesterol.
If Zurich had known about this when the customer applied for life insurance, they wouldn’t have offered them cover. Hence the claim was declined and makes up one of those 1%-2% of claims that are declined.
  •       L&G: In L&Gs report, they stated nine out of 10 cases that were declined in 2020, were due to “deliberate or reckless misrepresentation”. Misrepresentation would relate to not disclosing conditions or incorrect details around lifestyle (including alcohol consumption and smoking).
So in summary, you should be very clear when speaking to an insurance broker or insurer when applying for life insurance. We all have small health conditions or lifestyle variances different to one another, but what’s important is that you state that when taking out life insurance, especially if you want to take out life cover and you are high risk. If for whatever reason the conditions or lifestyle variances mean you can’t be offered cover, it’s important you try a specialist life insurance broker like The Insurance Surgery to see what is available. This way you can guarantee that your life insurance application is fully up to date and correct. Life insurance is there to support the families when the worst happens, so make sure you can protect yours. For more information on how a specialist life insurance broker can help, please click here.