High life insurance claims 'less likely to pay out'

Life insurers are less likely to pay out on higher value life insurance claims new research by a site that offers services to independent financial advisers (IFAs).

The study conducted by threesixty shows that there is an average difference of more than £10,000 between the claims that 12 insurance providers reject and those which they accept.

Threesixty followed the payouts of the 12 providers over a year to the end of March 2007 and discovered that the average rejected life insurance claim had a value of £70,121 while the average accepted claims were worth £60,172.

The study showed that while the average rejection rate among the insurers was 6.65 per cent it ranged from zero per cent to 25 per cent.

Non-disclosure was revealed to be the biggest reason for rejecting a claim with 99.59 per cent of life claim rejections attributed to the failure of applicants to disclose medical information.

David Ingram, a partner at threesixty, said that it was essential for life insurance customers to make a disclosure of all their medical conditions or risk invalidating their policy.

Meanwhile, changes to pensions and how people save for old age saw the UK insurance market grow by 30 per cent in the first quarter of 2007