Critical Illness claims explained

8 min Read Published: 10 Nov 2020

Critical illness claims explainedIn this article we take a look at critical illness claims and explain how the process works, how long it can take and which companies (if any) are best when it comes to paying out.

Do critical illness policies actually pay out?

Yes. Despite what the press might want you to believe, personal protection policies such as life insurance and critical illness actually do pay out. In fact, in 2019 more than £5.7 billion was paid out, with the percentage of successful claims standing at 98.3%, the highest percentage of claims on record.

How to claim on a critical illness policy

The first thing to do is to check your policy documents to see if your diagnosed condition is covered. Next, you'll need to contact your insurance company.

Most insurance companies have a dedicated claims team, meaning you'll often get a dedicated point of contact as well as being able to skip the queues. Your claims handler will talk you through the claims process and you'll be required to answer a few set questions. You may also be asked to complete a claims questionnaire where you can detail all of the information including the date of diagnosis and details of your doctor or consultant. Try and respond to any requests as quickly and efficiently as possible in order to help the claim proceed quickly. If you are not happy with the process or if you feel you have been unfairly treated you can complain to the Financial Ombudsmen Service (FOS).

How long does a critical illness claim take?

It depends. If you have been given a clear diagnosis and the medical records are readily available then the claim can proceed relatively quickly and may only take a few weeks. More complex cases that have lots of medical history may take longer and could take up to 12 weeks. On average, you should expect to receive a critical illness payout within 8 weeks. You can help to speed up a claim by providing as much relevant information as you can and by ensuring any details you give are accurate and up to date.

 

Did you know: Depending on the policy you have, you can receive a partial critical illness payment even if your illness does not meet the full definition or if your symptoms are less severe.

Partial critical illness claims explained

The illnesses that are covered by a critical illness insurance policy need to meet a certain severity but some policies cover less serious illnesses too. Listed illnesses that result in a 'full payment', where the whole amount that you are covered for (sum assured) would be paid out are often supplemented with some that are deemed 'partial payment', where a less serious illness would mean that part of the sum assured can be claimed. The most common event for this is Cancer. If you suffer from a less serious type of cancer or your cancer is of a lesser severity (or perhaps it isn't spreading), you could receive a part of the amount that you are insured for.

Often, the amount that is paid is limited to around 25% of the amount you are insured for and capped at around £25,000. Again, not every insurance company provides this and the amounts will vary too. For a person who has had to receive treatment for a less serious cancer, this money can lessen the financial impact of taking time off work, the cost of care for their children or even pay for the treatment to be carried out privately. If you're paying for a policy you might feel frustrated if you're in this situation and can't claim any money to help you because your cancer hasn't met the full payment definition. So, look out for this as it adds good value and in some cases, your cover for a full claim will be unaffected by this sort of claim.

Which company is best for Critical Illness Insurance claims?

Ultimately, we all want to know that any policy we take out provides us with good cover and that it will pay out. Most insurance companies publish their claims statistics to show what percentage of claims were paid out each year. Some will even explain the reasons for those claims that weren't paid. The claims that get turned down are either because the illness suffered doesn't meet the definition specified in the policy or the policyholder's application misrepresented their health at the outset.

Insurance companies might take your health information at face value when you apply for the insurance but will check your health history with your medical records if you claim, so it's vital that you complete your application carefully and honestly. Across the board, you can expect more than 90% of claims to be paid and this is very encouraging.

The table below shows the percentage of successful critical illness claims for 10 of the top insurance companies in 2019

Insurer % of Critical Illness claims paid in 2019
Aegon 94.00%
AIG 96.00%
Aviva 92.60%
HSBC 98.00%
Legal & General 91.90%
LV= 87.40%
Royal London 92.60%
Scottish Widows 93.00%
Vitality 92.90%
Zurich 90.00%

It is important to not get too hung up on the differences between a company that has a 90% payout rate compared with one that has a 96% payout rate. To help provide some context, companies that cover a larger number of illnesses will usually attract more claims requests and that might mean that there is a relatively larger number of situations where the claimant doesn't meet the definition of what is covered.

Critical illness claim - Case Study

In episode 295 of the Money to the Masses podcast we spoke to Emma Thomson, a personal friend and a leading voice in the protection industry who talked openly and honestly about her breast cancer diagnosis and how she was able to successfully claim on her critical illness policy. The critical illness payout that she received meant that she could focus on her recovery without having to worry about her finances. Emma was even able to use some of the money she received to purchase her dream motor home so that she could travel across Europe with her newly acquired rescue dog Molly.

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