Over £100m paid out to protection claimants last year  

Over £100m was paid out in protection claims in 2024 – a 68% increase compared with the previous year, according to LifeSearch, an independent broker.

Overall, the number of claims settled increased by 35% compared to 2023.

The specialist broker says the surge in claims reflects the increasing awareness and uptake of life insurance and protection products, and the growing reliance on these policies in times of need. 

With claims on the rise, Which? looks at the types of cover people are using, and how to decide what type of protection insurance is right for you.

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What types of protection policies were people claiming on?

LifeSearch recorded 1,418 individual, family and employer-paid claims in 2024, relating to life insurance, critical illness, terminal illness and income protection.

Here's how that breaks down.

Most of the money paid out last year went towards life insurance. Life Search says 23 insurers contributed to the combined sum of £65m paid out across 551 life insurance claims in its data.

Critical illness cover followed, with more than £23m paid out across 471 claims, while terminal illness claims totalled around £16.2m across 131 claims.

Income protection claims were fewer in number, but still important, with 141 people receiving a combined £698,257. These payments are usually smaller, as the cover is designed to replace lost income rather than provide a lump sum.

• Find out more: best life insurance in the UK

How does life insurance differ from other protection policies?

Protection policies are designed to offer financial support for you or your loved ones during tough times, but they do so in different ways and for different situations:

• Life insurance pays out a lump sum if you die while the policy is active. This is usually to help your family pay off a mortgage, cover living costs or manage other major expenses after you're gone. Most policies run for a set number of years, though whole-of-life cover is also available, which guarantees a payout whenever you die. 
• Critical illness cover provides a tax-free lump sum if you’re diagnosed with a serious condition listed in your policy, such as cancer, heart attack or stroke. It can help cover lost income, medical bills or home adjustments if your condition affects your ability to work or live independently. It is often sold alongside life insurance but can be bought separately.
• Income protection is there if you become too ill or injured to work. Instead of a one-off lump sum, it pays a monthly income until you recover, retire or the policy ends. It usually covers 50 to 70% of your salary and is especially useful if you don’t get much sick pay from your employer or if you're self-employed.
• Terminal illness benefit is usually included in life insurance. It pays out early if you’re diagnosed with a condition that means you’re expected to live for less than a year. This can give you and your family time to plan financially.

You don’t have to choose just one. Depending on your situation, you may decide that a combination of these offers the most useful support. 

• Find out more: Over-50s life insurance: is it worth getting?

Is protection insurance worth it?

It depends on your situation, but it can be a valuable safety net for many people.

If you have a mortgage, dependents or limited savings, protection insurance could help your household stay afloat if something unexpected happens. 

These policies are not a legal requirement, but they are designed to support you or your family during serious illness, a loss of income or after death. It’s worth asking:

• Would your household manage financially if your income suddenly stopped?
• Do you have enough savings to cover bills and other costs for several months or years?
• Would your family need help paying off debts, covering childcare or staying in the family home if you passed away?

If the answer is no to any of these, it may be worth considering protection cover.

• Find out more: What does private health insurance cost and is it worth it?

8 things you should consider before taking out a policy

Before committing to any protection insurance, it's important to think about what you need and how much you can afford. 

The right policy should be tailored to your situation, not sold as a one-size-fits-all solution. Here are some key things to think about:

1. What you need to protect: are you covering a mortgage, replacing an income, or planning for your family’s long-term needs? For example, decreasing term life insurance is often used to cover a mortgage, while level term might suit those wanting to leave behind a fixed lump sum.
2. How much cover is enough: look at your existing financial commitments to help guide how much cover to take out. Include debts, household bills, childcare costs, and future spending, such as education fees.
3. What you already have: check what protection your employer might already provide. Some people find they are covered for a certain amount of life insurance or sick pay through work, which may reduce how much additional cover they need.
4. Your budget: premiums can vary significantly depending on your age, health, lifestyle and the type of policy. Be honest about what you can afford each month, and avoid over-insuring.
5. The type of policy: think about whether you need life insurance, critical illness cover, income protection, or a combination. It's possible to hold more than one policy, and you can sometimes get cover packaged together. That said, the cheapest option is not always the best value.
6. Whether your needs might change: life events such as having children, moving home, or changing jobs can all affect the cover you need. You may want a policy that lets you increase your cover later without needing to go through another medical check.
7. Ways to save: comparing quotes from several insurers or using a trusted broker can help you get the best deal. Some online brokers also return part of the commission to you. Cashback sites and friendly societies might offer savings too, but always check the terms carefully.
8. Be clear on the exclusions: some policies will not cover pre-existing conditions or may apply waiting periods before you can claim. Always read the small print and ask the insurer if anything is unclear.

Find out more: 8 reasons you’re paying too much for life insurance