Key takeaways
- Insurers accepted 86% of individual income protection claims on 2024 industry data, against 98% across all pure protection products — the widest gap of any product line.
- Royal London paid 85.2% of its income protection claims in 2025 and Aviva accepted 90%, while their headline protection payout rates were 98.4% and 96.9%.
- Aviva said around three-fifths of its declined income protection claims in 2025 came from misrepresentation at application; firms told the FCA the figure ran between 20% and 85% in 2024.
- Legal & General's activities of daily living test asks whether you can walk 200 metres or hold 2kg for 60 seconds. It never asks what you do for a living.
- Only 37% of income protection holders told the FCA's researchers they fully understand their policy, and 50% named lost income through illness or injury as what it covers.
The 98% payout figure isn't the income protection number
You want to know whether an income protection policy pays when you can't work. On the most recent industry figures, 86% of individual income protection claims were accepted. That's 2024 data, published by the Financial Conduct Authority in January 2026 in the interim report of its pure protection market study. Across all pure protection products the acceptance rate was 98%.
The chart above plots five product lines from the regulator's Figure 2, which uses 2024 Association of British Insurers claims data. Whole of life sat close to 100%, all protection products at 98%, term assurance at 96%, critical illness at 91%, and individual income protection at 86%. Income protection is the outlier, and it isn't a near miss.
Two things account for most of that distance. One is the definition of incapacity written into the policy — the test you have to meet before any money moves. The other is what you told the insurer on the application form. Both are settled long before a claim, and the regulator's own consumer research suggests neither is well understood.
Two insurers' 2025 numbers bracket the industry figure
The 86% wasn't a bad year that has since corrected. Royal London paid a record £821m in protection claims in 2025 and paid 98.4% of all protection claims. Its income protection line was £9.6m to 1,536 customers, at an 85.2% payout rate. Aviva paid £1.99 billion across 61,632 individual and group protection claims, and accepted 96.9% of the individual protection claims it received. On income protection it paid just over £63.5 million to around 4,100 claimants, at a 90% acceptance rate.
The industry-wide figure for individual policies in 2025 was 97.9%, on Association of British Insurers data covering £7.84 billion of protection payouts. Income protection was a record £209 million of that, with the average claim up 7% to £10,700, and 7,600 people returning to work with the support of a payout. A third (33%) of income protection claims were musculoskeletal. Mental health conditions accounted for £39 million, nearly a fifth (19%).
So the same insurer can honestly report a 96.9% payout rate and a 90% income protection rate in the same release. Both numbers are true. Only one of them describes the product that pays you a monthly income when you stop working.
Own occupation is a test of duties, not of your job title
Own occupation is the strongest of the three tests, and it's narrower than the name suggests. Legal & General's Income Protection Benefit terms, in the April 2025 version, put it this way: "We'll recognise you as incapacitated if, because of your illness or injury, you are unable to carry out the material and substantial duties of the occupation you are following at the point of incapacity."
The load-bearing phrase is "material and substantial duties". Aviva's Income Protection+ policy conditions, the October 2024 edition, define duties as "the material and substantial activities and tasks that are normally required for, and form a significant and integral part of, the performance of your occupation that cannot be reasonably omitted or modified". Tasks that could reasonably be dropped or reworked don't count. Neither does the commute.
Aviva's test also reaches wider than one job. Its definition of incapacity is the inability "to perform the duties, of each and every occupation you've been following in the 12 months before that illness or injury". Occupations that made up less than 10 hours of your average working week are ignored. If you hold a desk job and a weekend trade, losing the ability to do the desk job doesn't settle the claim on its own.
Suited occupation asks whether some other job would do
A suited-occupation test — insurers also call it gainful occupation — moves the question from your job to your employability. Unum's group income protection user guide, dated May 2018, sets out the wording. A member is incapacitated if unable to perform the material and substantial duties of "the insured occupation, and of any gainful occupation with any employer for which they are reasonably fitted by reason of training, education or experience", and they are not performing any occupation.
That clause changes who has to prove what. Under an own-occupation test, a surveyor who can no longer climb scaffolding has a claim. Under a gainful-occupation test, the insurer asks whether the same person's training and experience fit them for a desk role that pays.
Some contracts run both tests, in sequence. Unum's combined cover applies the insured-occupation definition "for the deferred period and the first 2 years following the completion of the deferred period", and then switches: "Beginning immediately after the first 2 years following the completion of the deferred period the gainful occupation cover definition applies." A claim that was valid in year one can be reassessed against a different test in year three, without anything about the illness changing.
The same guide contains a clause that does quiet work. Where the insured occupation involves working more than 48 hours a week, an incapacitated member "will be considered able to perform that requirement if they are working, or have the capacity to work, 48 hours per week". Hours beyond that are not part of what the policy insures.
Activities of daily living stops measuring work altogether
The third test drops the idea of a job. Legal & General's activities of daily living definition recognises incapacity where illness or injury leaves you "unable to carry out at least 3 of the following activities". The list is physical and exact: walk "more than 200 metres unaided on a flat surface"; climb "a flight of 12 stairs and down again"; pick up "an object weighing 2kg at table height and hold it for 60 seconds"; bend or kneel to touch the floor; get in and out of a standard saloon car; write clearly or type.
Someone in treatment for cancer, or with a severe anxiety disorder, can be entirely unable to work and still walk 200 metres. Under this definition, being unable to work isn't the test. Failing three of those six activities is.
You don't usually pick which test applies to you. In the Legal & General wording it's decided by your hours: "If you're working on average at least 16 hours a week over the 3 month period immediately prior to your incapacity, the own occupation definition will apply." Drop below 16 hours in the three months before you fall ill, and the activities of daily living definition applies instead. Same policy, same premium, different test — set by your circumstances at the moment you stop working.
Non-disclosure is the reason firms give most often, and the spread between them is enormous
Aviva, reporting its 2025 claims, said that of the income protection claims it declined, "around three-fifths were due to misrepresentation of relevant information during application". On life cover the same cause led, and Aviva named health and lifestyle information specifically.
The regulator put the same question to a range of firms and got a far wider answer. In its January 2026 annex on income protection, the FCA reported that "some firms indicated that misrepresentation and non-disclosure accounted for around 20-85% of claim declines in 2024".
A spread from 20% to 85% is not really a measurement. It says firms are either counting different things or holding genuinely different books of business. Either way, "non-disclosure is the leading cause of declined claims" is close to the whole story at some insurers and a minority of declines at others. The industry maxim is doing more work than the evidence behind it.
What the law does when an application answer was wrong
Non-disclosure sits inside a statutory frame. The Consumer Insurance (Disclosure and Representations) Act 2012, in force from 6 April 2013, replaced the old duty to volunteer material facts with something narrower: "It is the duty of the consumer to take reasonable care not to make a misrepresentation to the insurer."
Section 5 then splits misrepresentations in two. One kind is "deliberate or reckless", where the consumer "knew that it was untrue or misleading, or did not care whether or not it was untrue or misleading". Everything else "is careless". And the Act puts the burden on the insurer: "It is for the insurer to show that a qualifying misrepresentation was deliberate or reckless."
The consequences diverge from there. Deliberate or reckless, and the insurer can avoid the policy and keep the premium. Careless, and the remedy is proportionate to what the insurer would have done with the right answer. The Financial Ombudsman Service's guidance to firms works an example: a customer who paid £100 in premium where £150 was due has paid two-thirds of the premium, so two-thirds of the claim is payable. The FCA's conduct rules add that an insurer must "not unreasonably reject a claim (including by terminating or avoiding a policy)".
A wrong answer on an application form is therefore not automatically a lost claim. What it does is open a set of questions about what the insurer would have done differently, and the answers decide how much is paid rather than whether anything is.
The strongest case against reading the 86% as a definitions story
Here's the objection, and it's a serious one. The same FCA annex reports that "one firm stated that 80% of their declined claims were in respect of not meeting policy criteria and that lower customer understanding of income protection was a contributing factor". That isn't a harsh definition. That's a claim for something the product was never built to cover, including attempts "to claim based on symptoms, without being able to evidence a condition".
The misunderstanding runs deeper than wording. The FCA's January 2026 consumer research found 37% of income protection holders believed they fully understood their policy. Asked what their policy covers, 50% named losing income due to illness or injury, while 23% named death. Research submitted by one firm found many wrongly believe income protection covers unemployment, redundancy and short-term leave. Separately, 45% of protection holders agreed they find the information literature around life and protection insurance difficult to understand, against 33% who disagreed.
There's an economic defence too, and the regulator largely accepted it. Income protection has the lowest claims ratio of any pure protection product at around 40%, against 66% for underwritten whole of life and 60% for term assurance, with an insurer margin of around 12%. The FCA attributes that to morbidity risk and variable claim duration, not to a harder line at the claims desk. The average length of an Aviva income protection claim in payment during 2025 was 6 years and 4 months, excluding limited-benefit policies — a duration no lump-sum product carries.
And complaints are low in absolute terms. The FCA counted 515 upheld complaints across pure protection at the Financial Ombudsman Service in 2024. The qualification is what those complaints are about: for income protection, declined claims are the most common complaint issue at 60%, the highest of any product in the study.
What the claims data cannot tell you
No published dataset splits acceptance rates by definition of incapacity. Nobody reports what share of own-occupation claims are paid against suited-occupation or activities of daily living claims. The 86% is an average across contracts that are testing different things, and it cannot be decomposed from outside. It cannot tell you which definition failed in any given decline.
The 20% to 85% range for misrepresentation is self-reported by firms, and firms don't share a taxonomy for decline reasons. Acceptance rates aren't standardised either. Whether a claim notified and then abandoned inside the deferred period counts as a decline varies by insurer, which alone can move a payout rate by several points.
The headline figures are 2024 vintage, drawn from the sample of insurers the FCA collected from, and the regulator has said it plans to refresh the assessment using 2025 data. The consumer research is self-reported understanding, which tends to flatter the real thing. And all of it is one national market, under one set of conduct rules.
What would change the picture
If acceptance rates were published split by definition of incapacity, the argument here would be confirmed or killed quickly. That data already exists inside insurers. The FCA's final report is due in the third quarter of 2026, with a refreshed claims-ratio assessment built on 2025 premium and cost data from a sample of insurers.
A common decline taxonomy would matter as much. A spread of 20% to 85% across firms for the same reason code tells you the reason codes aren't comparable. Narrow that, and "non-disclosure is the leading cause" becomes a measurable claim rather than a piece of received wisdom.
The last variable is the gap the policy sits behind. The FCA notes that a claimant would have to wait a minimum of four weeks before benefit starts, and Aviva's adviser material notes deferred periods can be extended up to 104 weeks "so the cover only begins when other support would end". Two years of self-funding is a different household problem from one month, and it runs into the same arithmetic as emergency fund size and income volatility and where emergency cash sits. What you can tolerate and what you can absorb are different numbers, which is the distinction drawn in risk tolerance versus risk capacity.
The definition decides whether a claim is paid. The deferred period decides how long you carry the loss first. And the 86% is one number standing in for three different tests — which is why the more useful question isn't how often insurers pay, but which of the three tests your working hours would put you under on the day you stopped.