Insurer Zurich UK Life paid out 94 per cent of its income protection claims in 2013 compared to 90 per cent in 2012.
Zurich said it paid out claims to 689 income protection customers, amounting to £12.3m.
This amount forms part of the total £188.6m Zurich UK Life paid in protection-related claims last year, including £65.2m for critical illness claims, £12.3m for income protection and £111m for death claims.
Of the 689 income protection customers receiving payments in 2013, 86 were new claims.
Around 6 per cent of claims were declined in total; 2.5 per cent because of non-disclosure where the applicant didn’t provide all of the information that was required when the policy was taken out.
Some 2.5 per cent were declined because the definition of disability was not met and a further 1 per cent were not successful because the customer was not in paid employment and so there was no income to replace.
Peter Hamilton, head of retail propositions for Zurich, said: “Across the UK we remain hugely under insured against the risks of being unable to work and provide financial support to our families in the event of illness.
“We also know that fewer than one in four people aged between 35 to 44 have any savings in place to act as a financial buffer should the worst happen. And at the same time, we’re seeing the cap in state benefits starting to take hold.
“The cost to those people whose lives are turned upside down by illness, as well as that to businesses and the state, means the current situation is unsustainable.
“To try and address how we as an industry might start to tackle this problem, we will soon be launching new research to explore how we can encourage people to consider income protection.”