According to Aviva Life and Pensions, there has been a significant increase in the number of individuals claiming on their income protection insurance policies for psychological issues. Last year, psychological issues were cited in one-third of the medical claims made to the company.
Income protection insurance is designed to offer a regular cash payment to replace part of a person’s lost income if they are unable to work due to a medium- to long-term illness, injury, or disability. The increase in claims for psychological issues is indicative of the growing impact of mental health concerns on individuals’ earning capacity.
Of particular note is the 7% increase in claims for psychological issues last year in comparison to the previous year, with more claims from women than men for mental health-related reasons. Orthopaedic issues followed closely, with more claims from men. However, the percentage of claims paid out due to cancer, neurological, and cardiac issues remained consistent with the previous year.
The impact of Covid-19 on income protection claims was also evident, with a decrease in claims from individuals suffering from long-Covid or complications from having had Covid. The average age of claimants for income protection is 46 for women and 49 for men, with the youngest claimants being a 25-year-old man and a 23-year-old woman.
The average length of time that Aviva income protection customers are out of work has now increased to seven-and-a-half years, highlighting the long-term nature of the illnesses or conditions leading to these claims. In fact, the longest active claim in payment is 32 years, with the customer having been 29 years old when the claim commenced.
Additionally, last year Aviva provided €250,000 in early intervention and rehabilitation support to its income protection customers, up from €200,000 in the previous year. The company also paid out €18m to 163 customers who were diagnosed with a specified illness, which pays out a tax-free lump sum if a policyholder is diagnosed with a serious illness during the term of the policy.
Breast cancer has historically been the primary reason for specified illness claims from women, but there was a 3% reduction in breast cancer claims last year following a significant 21% increase in 2022. Other cancers, cardiac issues, and strokes were also cited as reasons for specified illness claims.
Siocha Costello, of Aviva, stressed the importance of having life, specified illness, and income protection cover, particularly in the event of illness or injury. She highlighted the vital role of these insurance policies in enabling individuals to continue paying their bills and meeting their financial obligations during challenging times.
The rise in income protection claims for mental health issues underscores the growing concern around mental well-being and its impact on individuals’ ability to work and earn a living. It also serves as a reminder of the importance of having comprehensive insurance cover to provide financial support in times of need.