Pay-outs included £250,000 made the day after notification of a death, and a £1m payment to dependants.

This is the first time that ABI has collected life insurance pay-outs arising from a single event, reflecting the enormity of the pandemic.

According to the ABI, 11,198 claims were received under individual and group life insurance policies in 2020.

Of these, 10,205 were individual policies (whole life, term insurance and critical illness claims) with 993 on group life insurance schemes.

The vast majority of these claims – 96% for individual and 99% for group – have been paid. The remaining valid claims are being processed as quickly as possible.

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Of a total of £202m paid, £128m relates to individual policies, with £73m paid under group schemes. The average payout on individual policies was £13,100; for group polices it was £74,600.

In addition, £2.4m has so far been paid from 968 claims made under individual and group income protection insurance, so helping those who suffer a loss of income due to Covid illness.

Across all insurance products, including business interruption and travel insurance, ABI members expect to pay up to £2.5b for Covid-19 insurance claims incurred in 2020.

Case studies

• A death claim for £250,000 on a life insurance policy was paid one day after notification of the death.
• A claim under a policy to cover mortgage payments, led to £91,000 being paid within two days of notification.
• One particularly large death claim led to £1m being paid to the deceased’s dependants.
• A hospital nurse, diagnosed with Covid-19, was left with permanent neurological deficit with severe memory problems. She received a payout of £144,900 on a critical illness policy.
• A policyholder who contracted Covid-19 in March last year was still suffering severe fatigue in June. They claimed on their income protection policy and is receiving a monthly benefit to replace lost income. The insurer also provided a fatigue management programme specifically designed for people suffering from long Covid.

Yvonne Braun, the ABI’s director of long-term savings and protection, said: “No one will have been affected by the pandemic more than the families of those who have tragically died due to Covid.

“While no amount of money can ever replace a life, insurers have and continue to do everything they possibly can to help families cope financially through these distressing and worrying times.”