Why Critical Illness is always overlooked and how providers have upped their game

14th May 2018


There’s a very simple reason that there is such a vast difference in premiums between Life Insurance and Critical Illness cover: you are much more likely to claim on the latter than the former. Despite this, most of us are much more inclined to err towards covering our life than a Critical Illness.


With the relative price of Life Insurance in comparison to Critical Illness insurance, it’s not too difficult to understand why people jump on securing life cover above Critical Illness. For a small premium, your family can secure a large sum of money in the instance that you die, and that feels like a good deal vs the high premiums of Critical Illness cover. Especially when we reflect on the bad rap that Critical Illness insurance has had over the years too.


Let’s face it, Critical Illness insurance had long been seen as a policy that insurers were notoriously untransparent with – especially when it came to declaring how many successful claims were made. While this hasn’t been the case for many years now, with insurers being forced to clean up their act and behave much more transparently, the public is still wary and the market is still suffering a hangover from its actions.


With this in mind, let’s look at why Critical Illness is a necessary consideration and what providers are doing to ensure that you can be confident in them.


Why is Critical Illness necessary?

Critical Illness cover is insurance that is designed to pay you a tax-free lump sum in the unfortunate circumstance that you are diagnosed with an illness during the term of your policy. The money you are paid out, in a time that is likely to be very stressful, could be used to make your mortgage payments, replace your lost earnings and pay for your usual household outgoings and lifestyle.


Without it, if you become critically ill and are unable to work, you will have the added worry of your financial situation to bear too. This situation is only exacerbated in the scenario that you are the only earner in your family and have dependents.


Nathan Ansell, one of our advisers, explains:

“Most of us know someone who has been diagnosed with a Critical Illness, what feels like out of the blue, after a check up at the doctors for feeling a bit ‘off.’ It’s not too hard to imagine it happening to yourself. What is, however, is the very sudden impact of such an illness. If you are unable to work and don’t have savings of £100,000 or so in the bank, it’s likely your savings would only last paying your mortgage and the bills for a couple of months. Insurers call this the ‘breadline to deadline.’ Critical Illness insurance is designed to protect you and your loved ones from this scenario, at time that is stressful enough already.”


More than that, the statistics show that it is worth giving consideration to. According to MoneySupermarket.com, we are five times more likely to claim on a Critical Illness policy than a Life Insurance policy before the age of 65 – in fact, between the ages of 45-49 years old is when most Critical Illness claims are made. Yet, as insurance underwriter Scott Cadger explains: people are four times less likely to take out critical illness cover (8%) than they are to obtain life insurance (34%). There is a clear discrepancy here that needs addressing…


 What are insurance providers doing to respond to these discrepancies?

Insurance providers are upping their game – the market is not what it used to be and you can feel a lot more confident in the money you are investing in your premiums and peace of mind.


Firstly, you can now find most insurers claim figures on their websites. These will give you a percentage of the amount of claims made vs the amount that were paid out. When looking at these figures it’s important to consider the reasons that most insurance claims aren’t paid out – often it is because the insured failed to disclose an illness. You can combat being part of the small percentage who don’t get paid out if you need to make a claim by simply being transparent in the fact find and insurance application you go through with your broker.


In addition to this, and most importantly, many of the big providers have, in the last few months, greatly extended the amount of specified Critical Illnesses they cover. Vitality, as an example, enhanced their cover packages only last month, adding an additional 35 definitions to their primary package. Their comprehensive package now covers 178 conditions – a hugely different marketplace to 5-10 years or so ago when only 40-50 conditions were covered. Legal and General also improved its Critical Illness offering in the last month by introducing two levels of cover.



With all of this in mind, it’s worth spending some time talking over your circumstances with one of our advisers. Yes Critical Illness costs more but, as the statistics show, you are also more likely to claim on it. For the peace of mind that it brings, knowing that you are covered in the instance you are no longer able to work, it is absolutely worth looking into.

All content is accurate at the time of publication

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