Critical Illness Cover Claim Payout Rates by Insurer

Percentage of Critical Illness Claims Paid Out by Insurers

Every year, the ABI publishes the payout statistics from all insurers. The latest figures are from 2022, and show that 91.3% of all Critical Illness cover claims were paid, with over £1.22 billion getting paid out in total.

It’s quite hard to choose the provider with the highest percentage of successful claims, as they’re all fairly consistent. As you can see in the table below, almost all insurers paid out on over 90% of claims.

Critical Illness protection often comes with life cover. But the statistics for Life Insurance policies are separate, with an average of around 98% or 99%. The below table shows only Critical Illness individual protection claims in the last three years.

The above table isn’t a simple measure of the best companies for critical illness insurance.One insurer might have better policy wording or could be better for you. With this in mind it is important you compare providers carefully.

Understanding Critical Illness Payout Rates

It’s important to understand what insurer payout rates are and how they’re worked out before going ahead with a policy. This way, you can make informed decisions when it comes to choosing a provider.

How Does Critical Illness Insurance Pay Out?

Critical Illness Cover is a type of personal protection that provides you with financial support in the event of being diagnosed with a serious illness.

Unlike Income Protection Insurance, Critical Illness Cover pays out a lump sum of money when you make a claim. With this payment you can pay the mortgage, bills, and help fund any lifestyle changes caused by your illness.

When Does a Critical Illness Insurance Policy Pay Out?

Your Critical Illness insurer will pay out if you’re diagnosed with one of the specific medical conditions or injuries listed in the policy. Your policy then ends after you claim.

The conditions that are covered under a Critical Illness policy varies significantly between different insurance companies. That’s why it’s important to find the right provider for your needs (we can help you do that).

What Illnesses Are Covered?

An average Critical Illness Insurance policy can cover anywhere from 40 conditions to over 100. But to start, there are minimum standards that insurers have to meet, so all Critical Illness policies will cover:

• Cancer
• Heart attack
• Stroke.

However, the amount a provider might pay out for these conditions can vary. It all depends on the severity of the condition and your particular policy.

What Illnesses Aren’t Covered?

Make sure to check if your policy includes the following options, as they might not be automatically included:

• Total Permanent Disability
  This covers you if you’re completely and permanently disabled
• Terminal Illness
  Applies if you have a severe and incurable condition with a life expectancy of 12 months or less
• Child Cover
  Includes your natural, adopted, or step children.

Remember that not all insurance providers offer coverage for certain mental health conditions. Some do, but many don’t. So always check the terms and conditions of a policy.

How Do Insurers Categorise Illnesses?

Insurers categorise illnesses by severity. And the more severe your condition, the bigger your payout if you need to claim. These are known as:

• Full payment conditions
• Additional payment conditions
• Partial payment conditions
• Enhanced claims.

Let’s look at them in more detail.

Full Payment Conditions

When you buy Critical Illness Insurance, you’ll be covered for some conditions which will pay out your full lump sum. As well as severe cancers, heart attacks and strokes, these will often include:

• Blindness or deafness
• Multiple sclerosis
• Diabetes mellitus type 1
• Third degree burns
• Coma
• Motor neurone disease
• Major organ failure, transplant, or removal.

Once your full payment is made, your policy ends and you’ll no longer have Critical Illness cover.

Make sure you check which conditions your policy includes. For example, skin cancer isn’t always guaranteed to be covered. If you’re worried about this, or any particular condition, it’s always best to chat to an adviser, who can find you the best coverage.

Samantha Haffenden-Angear
Independent Protection Expert

Partial Payment Conditions

In some cases, providers might pay out what’s known as a partial claim. This is when you don’t meet their full definition of a particular condition, so they give you a portion of the total amount you’re insured for.

For example, if you took out a Critical Illness policy for £100,000 of cover and your provider agreed a partial payment, they might pay out £25,000 of your benefit. This would leave £75,000 to be paid out in the future, if you got a more serious illness.

Enhanced Claims

Some providers pay what’s known as ‘enhanced claims’. These are ‘booster’ conditions for which you’ll get an extra payout (that doesn’t impact your lump sum) if you’re diagnosed. For example:

• Zurich pays out up to £100,000 if you’re diagnosed with one of ten life-changing conditions before the age of 50
• Scottish Widows pays out up to £200,000 if you develop one of four neurological conditions by age 45
• LV= also pays up to £200,000 for certain life-altering conditions.

What Illness Is Most Likely To Result In A Payout?

There’s a reason why all insurers need to provide cover for cancer, heart attacks and strokes. In fact, they make up around 80% of all Critical Illness claims.

• Cancer alone accounts for almost 70% of all claims
• Heart attacks range somewhere between 10% and 20% of payouts
• Strokes typically make up around 5% to 7% of all critical claims.

Because cancer is common, but often treatable, many providers offer extra guarantees to help you through such a diagnosis. For example, Guardian guarantees they’ll pay out on all cancers, regardless of severity. Meanwhile LV pays out £1,000 if you’re diagnosed with any form of cancer.

You can also get different kinds of help during your illness and treatment. Depending on your insurance provider, this could include things like support from nurses, counselling, practical assistance, and aid with going back to work.

When Would Critical Illness Insurance Not Pay Out?

Your insurance policy won’t pay out if the condition you’re trying to claim for isn’t on your insurer’s list of covered illnesses. They might also deny your claim if you don’t precisely meet their definition of a critical illness.

Sometimes, claims are declined due to specific exclusions, or if you didn’t disclose important information when you applied. Here are the most common reasons for a Critical Illness claim to be denied:

• Alcohol or drug abuse
• Taking part in a criminal act
• Certain hazardous sports and pastimes
• Living abroad outside of EU territories for more than 13 weeks out of any 12 month period
• Self-inflicted injury
• Unreasonable failure to follow medical advice
• War and civil commotion.

If you acquire a critical condition through any of these means, your claim will likely be denied. However, it’s important to note that all Critical Illness policies differ. What one provider excludes, another might cover.

How Is A Critical Illness Claim Paid?

A Critical Illness claim is paid out as a tax-free lump sum, directly into your bank account. You can either deal with the insurer directly, or if you bought your policy through Drewberry, we can do this on your behalf while you focus on your health.

There’s a couple of stages to the Critical Illness claims process.

Step 1: Wait For ‘Survival Period’ To End

All Critical Illness policies have a ‘survival period’. Sounds grim, but this is the period of time that you need to survive following your diagnosis. This is usually between 10-14 days, depending on the provider.

For example, if you suffered a major stroke and died suddenly within the survival period, your Critical Illness policy wouldn’t pay out to your family. For this reason, most people take out a combined Life Insurance and Critical Illness policy. These policies pay out in either event: death or critical diagnosis.

So, in this scenario, the Life Insurance would pay out and your next of kin would receive the lump sum. A combined policy doesn’t cost that much more, but gives you better protection.

Step 2: Submit A Claim

When you submit a claim, your provider will usually contact you with the evidence they need to approve it. This will include medical information from your consultant, which your hospital will need to provide. Once your insurer has the evidence, they’ll check everything carefully before arranging payment of your claim.

Insurance providers have to comply with regulations and carry out certain checks as part of their due diligence. This includes thorough assessments and anti-fraud checks.

The process for a successful claim might take around 8 to 12 weeks before you receive your lump sum payment. It can be longer if a diagnosis is very complex. If you buy your policy through us, we’ll be here to take that stress off your shoulders.

Need Help Choosing the Best Critical Illness Insurance?

When you take out Critical Illness cover, it’s obviously hugely important that your policy will pay out in the event of a valid claim. Ultimately, you need to consider how to find the best policy for you given your circumstances and needs.

Luckily, we live and breathe insurance, and are ready to chat about what’s best for you.
No fees, just independent advice and access to the most competitive rates. Give us a call on 02084327333 or email help@drewberry.co.uk.

Why Speak to Us?

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We all deserve a first class service when it comes to issues as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

• There is no fee for our service
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For help and fee-free advice, don’t hesitate to give us a call on 02084327333 or email help@drewberry.co.uk.