Mike Aldridge: Why advisers should hold annual protection reviews

Despite numerous stories in the press that “life policies do not pay” the latest claims statistics released by providers present a very different case c

The stats show the percentage of life claims paid tend to be in the high 90s. Cancer came in as the top cause for claims on life policies, as well as critical illness, terminal illness and children's critical illness policies.

Critical illness claims paid by the main providers are also comfortably above 90 per cent. The average age of critical illness claimants with L&G was 46 years, rising to 47 years with Aviva and 48 years with Royal London. It is always distressing to see the amount of children's critical illness claims, although, at the same time, great to think how much the payouts will have helped support families through an incredibly difficult time.

Income protection presents a similar picture, with over 90 per cent of claims paid too. Again, cancer is high in the reasons for claim, alongside musculoskeletal and mental health issues.

What I find staggering is the sheer amount of money being paid out. For instance, L&G paid out £277m worth of life claims to almost 7,000 people, while Aviva and Friends Life life insurance, critical illness and income protection policies paid out more than £839m to 23,000 customers and their families.

We often talk about the number of people in the UK that do not have cover, yet the amounts paid out by the main providers still amount to hundreds of millions of pounds.

Worryingly, there are also customers that have taken out policies but are not fully aware what cover they provide, nor when and for what they can claim. We had a case recently where an adviser called a client to offer a review of their protection needs, only to be told that arranging cover would be impossible, as they had been diagnosed with cancer the previous year.

When the adviser asked whether they already had a policy and whether the claim had gone through smoothly, he was told they had refrained from making a claim due to concern over how it might impact on future insurance premiums. The amount of cover in this instance was in excess of £150,000.

Had the claim been made, and presumably been successful, the client would not only have been relieved of a significant amount of financial pressure at the time but would also have benefited from the additional support associated with many policies today.

Claimants often say the added support such as counselling services, physiotherapy sessions and practical advice, as well as having someone at the end of the phone, can play as crucial a role in recovery as the reduction in financial pressure from a payout.

It is so important advisers keep in touch with their clients for this reason and why we should keep pushing within the industry for annual reviews. It would also be great to see more good news stories in the press highlighting the fact that, while there may be a small number of claims rejected (rightly or wrongly), there are thousands being accepted and millions of pounds being paid out to families at a particularly devastating time.

Mike Aldridge is sales director at London & Country

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