Large increase in life insurance claims paid out in 2021
If consumers learned one thing from the pandemic, it was the value of life insurance to provide for their families after they are gone.
There was a large increase in life insurance claims paid out in 2021, with cardiovascular disease and cancer still claiming many lives, while Covid-19 also contributed with three waves during the year. If consumers learned one thing from the pandemic, it was the value of life insurance to provide for their families after they are gone.
Momentum Retail Life Insurance and Liberty recently announced their 2021 claims statistics, which indicated that life claims increased by 66% at Momentum and by 59.6% at Liberty, while Momentum paid out claims to the value of over R8.97 billion and Liberty R10.12 billion.
Jenny Ingram, head of product development at Momentum Life Insurance, says the bulk of the claims can be attributed to Covid-19 mortality claims, but that does not mean there were no other trends.
Covid’s impact on life insurance claims
“Of course, 2021 was a big year for COVID-19 as the country experienced three waves within just one year. This was always going to become an expected outcome for our death claim stats. Covid-19 was the cause of 42% of the death claims, followed by cardiovascular claims at 20% and cancer at 17%.”
Covid-19 affected men and women almost equally as the main cause of death, with the virus causing 37% of the female deaths and 40% of male death claims.
A new trend that emerged was evident in lump sum disability claims, with cancer as the main claims cause for men and women that increased by around 30%. “We will only know in a few years’ time if the increase in cancer claims was due to people not going for regular check-ups,” Ingram says.
The largest death claim Momentum paid out was for R86.4 million, for a 54-year-old man who committed suicide. The second largest claim was for R80 million for someone who died in an aviation-related accident. The third largest payout of R66 million was for someone who died from Covid-19. R3.1 billion was paid out for Covid-19 deaths.
Momentum also paid out death claims for five people over the age of 100, with the oldest dying at the age of 104.
Ingram says this indicates a trend of increasing lifespans, as Momentum paid death claims for five or more centenarians in four of the last seven years. It shows that consumers must consider that they can reach this age when they prepare for retirement.
Critical illness claims
For critical illness, cancer remains the dominant cause at 44% of claims, followed by cardiovascular at 20% and nervous system complications, such as strokes, at 12%. Ingram says the two main causes for critical illness claims are often considered lifestyle diseases that can be prevented to a large extent.
Momentum paid out R39 million in Covid-19 related income protection claims which were 19% of all income protection claim pay-outs, but the biggest cause of income protection claims (23%) was musculoskeletal issues, such as chronic neck and back pain.
Two waves of Covid-19
Liberty’s payments to 43,600 individual clients and their beneficiaries represent a 59.6% increase from the previous year when it paid out R6.43 billion in claims.
David Jewell, executive for retail solutions at Liberty, says this substantial increase was due to the cumulative effects of the two most damaging waves of Covid-19 coupled with all other existing risk events.
While Covid-19 claims made up 21.2% of all claims in 2021, cancer remained a significant disease as well, making up 20.7% of all claims during this time. Prostate cancer was the most common for men at 29% of all male cancer claims, while breast cancer was the most common for women at 38%.
Cardiovascular disease was responsible for 17.4% of all disease claims.
“Cancer and many heart conditions can in part be understood as lifestyle related conditions and this reflects on the health challenges faced by many South Africans,” says Dr Dominique Stott, Liberty’s chief medical officer.
Other life insurance claims
Retrenchment claims in 2021 formed 7.2% of all Lifestyle Protector claims, compared to 8% in 2020. Liberty also saw a spike in mental health claims, particularly among working people between 35 and 54, largely attributed to the stresses brought on by Covid-19.
Liberty paid out numerous claims for conditions such as major depression, which accounted for 45% of all mental health claims and for schizophrenia which accounted for 15%. Other causes of mental health claims were for conditions such as anxiety, inability to work and grief.
Claims not paid were due to issues such as unmet policy or benefit criteria and non-disclosure.
Lisa Gibbon, divisional executive for onboarding at Liberty, explains non-disclosure happens when you do not answer medical, financial, lifestyle or occupational questions correctly or when you omit important information.