LV= has told advisers to check their client’s cover amid an increase of declined critical illness claims on the previous year.
The mutual’s claims report for 2023 shows that three in five of the CI claims it could not pay were due to customers not meeting the definition.
And in a message to advisers, LV= said this is “why it’s important that your client understands how to check their cover”.
Over the year, LV= could not pay 15.5% of CI claims. That compared to 11.9% in 2022.
This contrasts with slightly fewer life claims not being paid out (2.9% compared with 3%) and new income protection claims (18.6% compared with 19.8%).
But there was also an increase in personal sick pay claims not paid out – 14.9% compared with 14.2% in the previous year.
According to Health & Protection’s Individual And Business Protection Report 2023, LV= ranked lowest among the insurers which provided data, with 88% of CI claims approved in 2022.
That compared with 96.3% by AIG Life, 93.6% by Royal London, 93.5% by Aviva, 93.4% by Legal & General, 93.3% by Scottish Widows, 92.5% by Vitality and 91% by Zurich.
Overall, LV= paid individual protection claims totalling £135m during 2023, up 6% on 2022.
The mutual supported more than 8,000 claimants and their families, paying 94% of all individual protection claims including life, critical illness and income protection.
Critical illness
LV= paid out more than £27m in CI claims in 2023 to more than 370 individuals and families, with the highest payment of more than £600,000.
Cancer accounted for 59% of all critical illness claims, followed by heart attack (10%) and stroke (5%).
The most common forms of cancer claims were breast (25%), bowel (13%) and prostate (12%).
In addition, LV= paid a total of more than £605,000 for 25 children’s claims. The majority were cancer claims, with the youngest claimant just one day old.
Life
Life insurance claims totalled more than £87m, supporting 5,500 families and their loved ones. The amount includes claims for life, family income benefit, terminal illness and whole of life products (some of which are non-underwritten products).
Whole of life products are no longer open to new business.
The highest claim payment was £2m, and the top causes for claims were cancer (36%), heart-related conditions (23%), respiratory (9%) and stroke or brain haemorrhage (5%).
While the average age of claimants was 65, the youngest was 28.
Income protection
When it comes to income protection, LV= paid nearly £17.2m in IP claims to more than 1,100 individuals and families.
IP figures include new claims of £3.6m, and claims already in payment that continued to be paid in 2023 of £13.6m.
Musculoskeletal issues (33%), cancer (23%) and mental health (15%) accounted for more than half of all income protection claims.
The average length of a claim was five years 10 months for full IP.
LV= paid almost £89,000 in parent and child cover claims after their child suffered a serious illness. The average age of the child at claim was seven years old.
Personal sick pay
For personal sick pay claims totalled almost £4m with payments made to more than 1,100 people.
Personal sick pay figures include new claims of £2.5m, and claims already in payment that continued to be paid in 2023 of £1.4m
The youngest claimant was 17 and the top reasons for claims were musculoskeletal (45%), fractures (10%), coughs and colds (6%) and mental health (5%).
Rejected claims
Overall, 6% of LV= protection claims were not paid out in 2023.
Of the 6% which were not paid, more than seven in 10 were because of misrepresentation or fraud.
Common areas of misrepresentation included failing to accurately disclose existing medical conditions, alcohol units consumed and smoking status.
Highest on record
Anna Rogers, head of underwriting and claims at LV=, said: “In 2023 LV= paid out £135m in protection claims which is the highest on record LV= has paid out for protection claims.
“More than 8,000 individuals and their families have benefited from having a LV= protection policy in place, and we’re proud to have supported them through the difficult moments in their lives.
“The value of protection is worth so much more than an insurance payout.
“The LV= Doctors Services provides valuable support throughout the life of the policy and members also benefit from our Legal Advice Line and Member Support Fund.
“When people are going through a life-changing event, the relief of knowing that their finances are taken care of can make a difference.
“We were unable to pay 6% of claims and a good proportion of these outcomes could have been avoided.
“Providers and advisers must work together to educate customers on the importance of full and accurate disclosures in their applications. This would help break down some of the preconceptions out there about insurance.”