Insurers Aviva and Friends Life paid out more than £839m to customers with life, critical illness and income protection insurance last year.
More than £500m was paid to the families of life insurance customers who had died or been diagnosed with a terminal illness in 2015.
£303m was paid out to customers with a critical illness and more than £35m went to customers with income protection cover.
More than 23,000 Aviva and Friends Life customers – or their families – were given payouts after making life, critical illness or income protection claims last year.
Around 15,000 life and terminal illness customers benefited, as did 4,000 critical illness customers and nearly 4,000 people with income protection insurance.
The average amount paid to critical illness customers was £74,275 and the average age of claimants was 45 for women and 49 for men.
Cancer remains the most common cause of critical illness claims, accounting for 63% of all claims, followed by heart attack (10%), stroke (6%), multiple sclerosis (4%) and total permanent disability (4%).
Robert Morrison, chief underwriter for protection at Aviva, said: “Being there for our customers and their families when it matters most has been the underlying philosophy for both Aviva and Friends Life protection for many years.
“It has shaped the enhancements we have made to improve our products, to simplify our claims processes, and to our commitment to paying as many claims as we possibly can.
“No one ever wants to claim against this type of policy, but knowing that as a combined group we are committed to paying claims wherever possible will provide customers and their families with the reassurance and comfort they need if they face such difficult times.”
Last year, Aviva and Friends Life paid out on 98.9% of life insurance claims and 92.5% of critical illness claims.
Of the critical illness claims that were not paid, 1.6% were declined because of non-disclosure and 5.9% for conditions not met.
Bilgo previously reported that consumers were increasingly resorting to payday loans and credit cards to pay for funeral costs.
Figures from British Seniors Insurance Agency revealed that families and friends had spent £4.8bn on funerals for their loved ones over the past five years.