TAL makes record life insurance payouts

New figures show that Australia’s leading life insurance specialist TAL paid out more than $843 million in claims last year, a massive increase of 45% over the previous year’s payout of $580 million.

Of the different forms of life insurance, those taken out to help people while still living account for the majority of the payments, while a payment in the event of death now accounts for just 47.5% of benefits paid.

Cancer features as the chief reason for claims in 2013 for three out of the four types of life insurance, including Life (lump sum upon death), Disability (lump sum upon permanent and total disability) and Critical Illness/Trauma (lump sum for defined illnesses).

Cancer is the third highest cause of claim for Income Protection (regular income payment upon defined illness/disability), followed by musculoskeletal/connective tissue disorders, and the leading cause, injury/fractures.

TAL Group CEO Jim Minto said the huge increase in the amount of life insurance payments made to customers in 2013 reflected an industry trend of rising claims in recent times as people become more aware of their life insurance benefits.

“The increasing amounts of life insurance payouts being paid to customers is really good news because it demonstrates the value and need of life insurance in protecting customers and their families when they most need it,” Mr Minto said.

“Life insurance provides peace of mind, helping people sleep better at night, but there is a tangible benefit with close to a billion dollars paid by TAL to its customers in 2013, helping them not only protect the life they have created but the one they dreamed of for the future.”

This equates to paying an average of $3.37 million each and every working day (excluding weekends and public holidays) to customers.

Claims figures over recent years show the oldest customer who received a benefit payment was 112 years old (Life lump sum upon death payment) and the claim for the youngest insured life was for a child aged under 1 whose parents had a child payment benefit included in their Accelerated Protection product policy.

The TAL payment figures follow a recent TAL consumer survey finding that one in five people (20%) said they had heard of a friend or family member who had suffered an injury, illness, disability or even death but their life insurance had saved them and/or their family from financial hardship as a result.

And earlier work by TAL in developing Australia’s first Financial Protection Index shows people believe they have far less life insurance than they need, with a national protection score of just 24.2 out of 100 (with 100 representing full protection) recorded last year. Work is currently underway to determine the 2014 financial protection index scores.

“While life insurance has often been a bit of a taboo subject these figures and our survey findings demonstrate just how many people in society benefit from having cover and how it can help provide dignity and hope at a time of despair,” Mr Minto said.

“While superannuation and direct insurance has helped expand the reach of life insurance and reduce the social security benefits burden on taxpayers, the real question people need to ask themselves is do they have appropriate and adequate levels of life insurance?

“Unfortunately I think that answer is ‘no’ in most cases, as is demonstrated by our own research and from the Financial Services Council and the fact that the Government has made it law this year for all default My Super superannuation products to automatically include life insurance cover and for self-managed super fund trustees to legally have to consider their life insurance needs.

“While a financial adviser is a great place to assess your insurance needs, many people prefer to do their own homework and self-service directly with a provider and in those cases it is vitally important to ensure they have the right amount of life cover in case their income suddenly stopped.”