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In the year up to October 2007 more than £29m was paid out on 847 critical illness claims, according to Scottish Widows.

Scottish Widows said the number of claims paid out had steadily increased steadily in the last few years. In 2005 82 per cent of claims were paid, increasing to 84 per cent in 2006.

The protection provider said the reduction in claims denied was as a result of measures taken by the industry and the work of the Association of British Insurers to reduce non-disclosure.

The insurer also revealed it had paid out a total of £150m, for more than 4540 critical illness claims, since January 2000.

Scottish Widows said 95 per cent of all critical illness claims fell into just five categories. Cancer accounted for 61 per cent of claims while heart related diseases accounted for 21 per cent.

Claims for strokes, multiple sclerosis and children's cover accounted for 13 per cent of claims.

Richard Jones, protection market director for Scottish Widows, said a lack of consumer confidence was still having a detrimental effect on take up of protection.

He said: "Through publishing its claims history, Scottish Widows illustrates most claims are paid and highlights the reasons why some claims are declined.

"Of the claims received during the 12 months from October 2006 to October 2007, 5 per cent have been declined because the customer failed to disclose material information when the policy was taken out.

"A further 9 per cent of claims were unsuccessful because the reason for making the claim was not actually covered by the policy definition. This is the second year Scottish Widows has increased the proportion of successful claims."

Matt Morris, policy adviser and PR manager for protection adviser Lifesearch, said he expected the amount of claims paid to increase year-on-year.

He said: "A combination of the work the ABI has done, particularly on redefining levels of non-disclosure, IFA and media pressure and the work of the providers themselves should see a reduction in the number of claims turned down."