Insurance Statistics – The Truth
There is much understandable cynicism about insurance statistics. Whenever there is a controversial debate both sides will inevitably point out statistics to support their viewpoint. Statistics can be interpreted in different ways by different people at different times. By their nature statistics are generalizations. It is thought that people often find it easier to grasp specific examples rather than numbers. It only becomes meaningful when we see people who put a human face to the statistic.
Let’s view some of the insurance statistics about income protection in the UK and there meaning.
The size of the industry is huge compared to the size of the population.
In December 2010 there were estimated 7 billion people in the world, and around 61 million living in the UK. Therefore the UK is home to just below 1% of the world’s population. However the UK insurance industry is the 3rd biggest in the world.
In 2012 the number of term, life, and other protection policies active in the UK was estimated to be approximately 29 million. Insurance statistics show these policies have paid out almost £200 billion in claims and benefits. Insurance companies employed over 300,000 people and paid over £10 billion more in taxes.
It has been shown that Insurance companies are more than twice as likely to pay out as people believe.
The majority of people are pleasantly surprised when they come to make a claim on their insurance. The public believe that fewer than 40% of claims are successful. In reality the claims paid out on are around 90%. Claims can cover everything from cars and homes to pets. It is estimated that over a £1 million a year is being paid out on cats and dogs alone. For human health, 60% of successful income protection claims relate to disorders which would be outside the scope of critical illness cover.
You could have more control over your premiums than you believe
A recent study concluded that a third of people who were without income protection insurance felt that it was too expensive for their budget. However it should be remembered that 20% of people will be off work for more than three months for health reasons at some point in their lives.
For those who are having trouble budgeting for insurance, there are simple ways to reduce the cost of income protection insurance. Income protection providers are now moving towards offering lower premiums to people who take care of themselves – and the savings made by choosing a healthier lifestyle (e.g. giving up smoking and reducing alcohol) can be put towards these premiums.
Children and young people can get sick too.
Children have an incredible ability to repair themselves following injury. A small percentage of them, however, do get seriously ill. It is of concern to know that statistically 66% of families do not have a financial plan in place to manage a child’s illness if it meant they had to give up work to assist with their child’s care. Approximately two thirds of people with critical illness cover for themselves are unaware of whether the policy also covers their children. Many policies do actually provide some level of cover for minors.