Any form of insurance can be seen as a risk.

You pay a monthly or annual premium to an insurance company for a set amount of cover, effectively passing the risk to the insurance company. As long as you pay the premiums you'll continue to be covered, for whatever purpose.

When it comes to protecting YOURSELF in the form of life assurance, critical illness cover, permanent health insurance or private health insurance you really do need to take the time to do your research (or pay someone to do it for you) as this form of cover is not the type that you'll normally be shopping around for on an annual basis.

For example, once you've applied for and been accepted for income protection cover it's unlikely that you'll change the plan or company that you're insured with in the future as the cover is based on your age and health at the time you apply.

One of the factors that you may not have included in your research is the actual claims history of the insurance company that you choose. After all, if you put in a claim you'll want to know what your chances of a payout are going to be.

During the last 2-3 years more insurance companies have been publishing their claims statistics. This is crucial information as it gives you the opportunity to understand which conditions are being claimed for the most (so you can ensure that your plan covers these conditions and the wording of these conditions is competitive when compared to all other providers).

Fortunately, the Association of British Insurers (ABI) publishes a set of definitions for 20 conditions (see below) and registered insurers who cover any of these conditions must comply with, or surpass, the ABI definition.

The 20 conditions:

-Cancer

-Heart attack

-Major organ transplant

-Stroke

-Coronary artery by-pass

-Kidney failure

-Multiple sclerosis

-Aorta graft surgery

-Blindness

-Deafness

-Loss of limbs

-Benign brain tumour

-Coma

-Heart valve replacement or repair

-Loss of speech

-Motor neurone disease

-Paralysis/paraplegia

-Parkinson's disease

-Terminal illness

-Third degree burns

Many companies also cover additional conditions, including bacterial meningitis and pre-senile dementia.

Skandia, one of the leading providers in the critical illness market, have recently released their claims statistics (covers claims up to 1 February 2007).

They have:

-Paid 1920 claims totalling over £182m

-The average age of claimants is 46

-On average a policy is in force for 4.7 years prior to a claim

The most common claims are for:

-Cancer, 59%

-Heart attack, 15%

-Heart surgery, 8%

-Stroke, 7%

The most common forms of cancer claimed for are:

-Breast cancer, £23m

-Lower intestine, £11m

-Malignant melanoma, £9m

-Prostate, £7m

They have paid 88% of claims, with the remainder being declined for the claim either not meeting the definition (10%) or where the applicant did not disclose all the information required at the time of application (2%).

The Financial Tips Bottom Line

If you currently have ANY form of personal protection policy, it makes sense to review your plan(s) to ensure the cover you have is competitive and suitable for your circumstances. If you don't yet have cover make sure you do thorough research before you buy a policy.