Zurich’s data for 2020 indicate that claims on its critical illness policies fell last year by nearly 15 per cent to £64.7m. It attributed the decline to fewer people accessing medical advice as a result of not wanting to be a burden on the NHS, fear of contracting coronavirus by visiting a hospital, and appointments not being available.
"A worry," was the verdict of Peter Hamilton on the drop in claims – he is head of market engagement at Zurich. "Finding and addressing medical problems early can reduce long-term impacts."
Similarly, Aegon recorded a 14 per cent reduction in the number of critical illness claims received last year – a drop that Simon Jacobs, underwriting and claims director at Aegon, said was related to fewer routine screenings being carried out for ‘mammograms and bowel investigations, which normally lead to a number of our cancer claims’. Jacobs says it is possible that claims could spike in the coming months as screening numbers get back to normal.
Analysing the claims data from these two companies confirms a number of things in my mind. First, and most importantly, quality financial protection insurance is worth its weight in gold and should be part of the financial armoury that financial advisers routinely display before clients.
It is a financial comfort blanket that most households should possess. Most, sadly, do not own it.
Second, unlike other insurances, financial protection cover has stood up to the tough test of coronavirus remarkably well, with Zurich paying out £15m in life insurance claims directly related to the illness – while 14 per cent of Aegon’s life insurance claims were ‘respiratory-related’. As Mr Jacobs said: "Nothing could have demonstrated the importance of protection more than the events of last year."
Finally, it is time for people like me (a cynical journalist) to discard their long-standing view that financial protection insurers decline more claims than they accept.
Last year, Aegon paid 93 per cent of critical illness claims and 95 per cent of income protection claims. The respective figures for Zurich were 87 and 85 per cent. These are percentages that confirm the insurance is worth buying.
Wearing my cynical cap for a moment, let us hope these high uphold rates are maintained if the future claims spike Jacobs talks about materialises.
Enjoy the dismantling of lockdown.
Jeff Prestridge is personal finance editor of The Mail on Sunday