Drewberry Insurance: Workers Estimate Life Insurers Only Payout 50% Of Claims
LONDON, February 13, 2013 /PRNewswire/ --
In their recent Health & Protection Survey, Drewberry Insurance finds that workers mistakenly believe that the UK's leading life insurers only payout around 50% of all claims made, which significantly underestimates the true payout rate of approximately 98% of claims.
Life insurance is an extremely important aspect of family financial planning but it is often argued by industry experts that the take-up rate is well below an optimal level, leading to a significant personal protection gap in the UK.
One explanation frequently proposed for this low take-up rate is that consumers are sceptical on insurers' willingness to pay valid claims.
A sample of 2,000 workers were asked to estimate what they thought the payout rate was for the UK's leading life insurers. The sample estimated the payout rate to be only 50% of all claims made, which would support the argument that consumers are distrustful of life insurers.
Life Insurance Payout Rate 96% Higher Than Workers Expected
In a sample of leading life insurers the actual payout rate in 2011 was closer to 98% of all claims made.[1] This means that the actual payout rate for life insurance is about 96% higher than what consumers think it is.
Tom Conner, Head of Protection at Drewberry Insurance, says, "It is often the case that clients are worried that insurers have a bad reputation for paying claims but these findings are far more concerning than I expected.
"A considerable amount of work needs to be done to inform and reassure the general public that life insurance has an excellent payout rate with all valid claims being paid, which should help to build confidence not only in life insurance as a product but also in the insurance industry as a whole."
Mortality Risk 7x Higher Than Workers Expected
In assessing the reason for a below optimal take-up rate of life insurance, it could be fairly safe to assume that a low expected payout rate would have a negative impact on consumers desire to purchase this insurance.
However, the survey also found that workers significantly underestimated the chances of passing away during their working life. The sample estimated the chances of an 18 year old dying before age 65 to be around 1 in 70, whereas the actual risk is closer to 1 in 9.[2]
Thus, correcting consumers' underestimation of both the payout rate and the chances of passing away are clear frontrunners for helping to close the life insurance gap.
Notes
- The 98% payout rate was calculated from the life insurance payout rates of the following insurers in 2011:
- Legal & General (98%)
- Aviva (99%)
- Liverpool Victoria (100%)
- Scottish Provident (98%)
- Bright Grey (97%)
- Office for National Statistics (ONS) Interim Life Tables, 2008-2011. Drewberry Analysis. A life expectancy calculator using this data can be found at the following link: http://www.drewberrymortgageinsurance.co.uk/mortgage-life-insurance/
- Full results of the survey can be found at the following link: http://www.drewberryinsurance.co.uk/health-protection-insurance-survey-2013
About Drewberry Insurance
Drewberry Insurance is a trading name of Drewberry Ltd, which operates as a nationwide independent insurance broker in the health and protection insurance markets. Drewberry Insurance offer insurance broking services for a range of individual and group policies, through the following specialised websites:
http://www.drewberrygroupinsurance.co.uk/ - Informational resource for implementing business health and protection schemes as part of an employee benefits offering.
http://www.drewberrymortgageinsurance.co.uk/ - Informational resource for arranging mortgage protection insurance, such as mortgage life insurance and mortgage payment protection.
http://www.drewberryhealthinsurance.co.uk/ - Informational resource for arranging both personal and family private medical insurance (PMI) policies.
http://www.drewberryincomeprotection.co.uk/ - Informational resource for arranging income protection insurance and payment protection insurance.
Drewberry Ltd is an appointed representative of Chase Templeton Ltd which is authorised and regulated by the Financial Services Authority, register number 311612. Registered address: Vantage House, 1 Weir Road, London, SW19 8UX.
For further information please contact:
Andrew Jenkinson
Drewberry Insurance
Vantage House
1 Weir Road
London
SW19 8UX
+44(0)20-8432-7334
http://www.drewberryinsurance.co.uk
[email protected]
SOURCE Drewberry Insurance
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