Customers have been supported with £6.85bn in claims pay-outs across group and individual protection policies in 2022.
Latest figures from the Association of British Insurers (ABI) revealed individual policies paid out 287,000 life insurance, income protection and critical illness claims in 2022, totalling £4.64bn.
The average pay-out from these policies increased for the third year in a row, from £14,931 to £15,448 (9%).
When combined with data from Group Risk Development (Grid) showing group policies paid out £2.21bn in claims, almost £6.85bn was paid out in 2022.
In 2021 the same analysis indicated protection claims payouts hit a new record, with £6.8bn paid out in individual and group life insurance, income protection (IP) and critical illness (CI) claims over the year.
This equated to £18.6m a day, £1.6m a day more than the previous record set in 2020.
Individual IP claims up 9%
More than 15,900 people claimed against their individual income protection (IP) policies in 2022, a 9% increase on the previous year, according to the ABI data.
The total value of claims also increased by 22%, with £231m paid to customers unable to work.
Claims for musculoskeletal issues were the main cause for an individual IP claim (34%).
This marked the second year in a row that musculoskeletal issues have been the leading cause of claims.
Covid-related claims down 64%
Meanwhile individual Covid claims plummeted by 64%, from 10,606 in 2021 to 3,846 in 2022 and now only represent 1.3% of the total number of all protection claims paid.
The falling Covid-related claims also led to an almost 73% drop in their total value, to £71m. The average pay-out for each claim also fell by 29% to £17,434.
Claims acceptance remains around 98%
The proportion of new individual claims paid has remained consistent at around 98% since 2017.
Overall, in 2022 97.5% of all protection claims, individual and group, were paid, including 96.9% of life claims.
In total 91.6% of critical illness claims were paid with 70.3% of total permanent disability (TPD) claims accepted, although this only totalled 342 claims.
And 84.4% of new IP claims made during the year were approved.
In the cases of more than half of all the declined claims, customers had not told their insurer key details about themselves or their circumstances when they took out the policy.
This article and changes to the table showing all protection claims (below) have been updated to reflect corrections to the data initially sent by the ABI.
Rebecca Deegan, head of protection and health at the ABI, said: “When you suffer a loss, fall ill or are badly injured, the last thing you want to be worrying about is your finances, especially during a cost of living crisis.
”That’s why the security that protection products can provide is so important.
”With another year of bumper figures and the vast majority of these claims being paid, it’s encouraging to see that individuals and their families continue to be supported through insurance.”