Critical illness claims rose sharply last year, new figures from the Norwich Union show.

According to the data, the number of claims made to the insurer for critical illnesses in 2008 was up 14% on the previous year. Over the course of last year Norwich Union paid out £121 million for such claims, and a further £216 million to the families of customers who had died or been diagnosed with a terminal illness. The largest proportion of claims - 63% - were from people who had been diagnosed with cancer.

The insurance firm declined 2% fewer critical illness claims than a year earlier, with an average £75,000 payout on 90% of claims. 2% of claims were rejected for non-disclosure of information - whereby a customer withholds his medical history when filing the claim.

Michael Whyte, chief underwriter at Norwich Union said that he was pleased with the figures, because they show that more people are aware of the guidelines in making an illness-based claim.

“We are pleased with our progress on non-disclosure, yet are concerned that we have to tell some people that their claim was not going to be paid because their condition, or the severity of their condition, meant they were not covered by their policy,” he said.

Whyte called on the whole insurance industry to raise the public’s awareness of which illnesses are covered by critical illness insurance.

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