More Evidence That Forties Is Insurance 'Danger Decade'

Clients aged in their mid-forties are the most likely to claim on their disability and critical illness cover, but this is also the period when most people cancel their policies, new analysis from TAL has shown.

A review of TAL's 'living insurance' policies (TPD, trauma and income protection) for the 12 months to September 2013, found that, on average, these policies were discontinued when the client was aged 45. The average age of claim for these covers was found to be 46.5.

The analysis also revealed that the average age a person takes up living insurance is 37.5, suggesting the average policy 'life' is around 7 years.

Looking specifically at its income protection policies, TAL found that half of all current claims are made within 24 months of the policy being taken out, representing a claim rate of 1 in 2. Two years ago the rate of claim for income protection policies was only 40% (2 in 5). The average length of time between cover being taken out and a claim being made is also shorter, reducing from around 6 years in 2011 to 4.7 years in 2013.

TAL Group CEO, Jim Minto, said the figures were disturbing because they demonstrated how these customers who stopped their policies were statistically doing so at the time when they were most likely to need financial protection.

'' We know that cost of living pressures are continuing to force people to rethink their domestic budgets but it is very unfortunate that those people who stop their policies for their reason do not see financial protection as essential for themselves and their families, '' Mr Minto said.

He added that the new analysis underlined the industry trend for people to increasingly claim on their life insurance products, with TAL's own total claim payout figure rising 45% last year to $843 million. (For more industry claims statistics, see: Millions Paid in Claims).

In April 2013, Asteron Life released a similar analysis of its claims and lapse data. See: Trauma 'Danger Years' Revealed.