Just under 100,000 families benefited from £3.1bn in protection insurance payouts in 2013, according to the ABI.
ABI figures have highlighted the vital role insurance plays as a result of a death, serious illness or injury, with 99,000 customers or families receiving payouts last year.
The insurance industry pays out £8.4m every day in individual life, critical illness and income protection insurance claims, with 97% of all claims paid in 2013.
ABI individual protection data 2013
|Product||Claims Received||% Paiid||% Declined||Average Claim Paid|
|Whole of Life||43,529||99.9||0.1||10,300|
Helen White, the ABI's Head of Protection, said: "Industry initiatives such as the ABI's Code of Practice on non-disclosure have led to a fall in the percentage of claims declined from 8% in 2007, as customers have become much more aware of which information they need to share with their insurer."
In 2013 the average claim paid in 2013 for individual income protection (IP) policies was £11,500 paying out on average for 230 weeks.
The average pay-out on a term life insurance policy was £51,500 with 98.4% of claims being paid. Total claim payments were £1.3 billion.
For whole life insurance the average claim payment was £10,300 with 99.9% of claims paid. In total £449 million was paid out.
The average pay-out on a critical illness (CI) insurance policy was £60,400. The percentage of CI insurance claims being paid continues to rise, with 91.8% paid (up from 80% in 2005).
Total Permanent Disability claims averaged £66,700 with 62.2% of claims paid, up from 50% in 2009.
Aegon research last year found one of the main barriers preventing people from buying protection was confidence in providers paying claims.
The provider said the new ABI findings should help to allay some of these concerns.
Dougy Grant, protection director at Aegon UK said: "Last year our protection research identified a lack of confidence in providers to pay claims as one of the key barriers stopping people from buying protection.
"It found that 63% of the respondents who would consider taking out a protection policy were concerned by whether or how much they would pay out and 41% of the respondents who would not consider protection policies cited a distrust in providers paying out as the main barrier to purchasing a protection policy.
"The figures released by the ABI today shatter the illusion that insurance companies don't pay claims."