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This compares with the 81 per cent of claims paid on critical illness protection in 2006 and 86 per cent paid on income protection in 2006.

More than £54.9m was paid out to policyholders in protection claims in 2007 which includes £5.8m in critical illness claims and £15.2m in income protection claims.

Chris McFarlane, head of protection at LV=, said he was pleased with the improvement in its claims record.

"We have put a lot of work into developing ways to help financial advisers and their clients with policy applications and claims, so that valid claims are paid promptly, and that the risk of non-disclosure is significantly reduced," he said.

LV= reported that the three causes of income protection claims were mental disorders representing 30 per cent of claims, musculoskeletal disorders amounting to 20 per cent and circulatory disorders which accounted for 11 per cent of claims.

Cancer claims accounted for more than two-thirds of all critical illness claims.

LV= has also produced a critical illness and income protection claim guide designed for financial advisers to use with their clients to help them understand the application process.

Earlier in the month, Friends Provident revealed the number of critical illness claims declined for non-disclosure dropped by a third in 2007. (See article here.)