Critical Illness Cover (CIC) provides you the total amount insured, which is tax-free, if you are diagnosed with a life-threatening medical issue which renders you incapable of working.

Insurers are finding that while life insurance policy claims are reducing, they are having to credit more and more claims on CIC policies.  The outcome of this is that the cost of CIC is becoming significantly more expensive than life policies.  If the amount of CIC claims reduce then consequently the cost of regular payments will fall too.

The cost of Direct Line and Legal & General’s CIC has gone up by around twenty and twenty-five per cent respectively.  But the likes of Norwich Union and Scottish Equitable come first in the price change race with increases of up to fifty per cent.  Other suppliers are attempting to charge more for CIC as well as the sector believes over the definition of ‘life-threatening medical issue’ and medical science makes giant strides in the management and control of particular conditions.

The Association of British Insurers has identified policies for prostate cancer and heart problems, for example.  If these health conditions are discovered early on they are not then considered to be ‘life-threatening’, at least for some people.  Another example is diabetes.  Currently Bradford & Bingley is the only insurance supplier which still allows this condition on its register of critical ailments covered.

A CIC policy usually is for an agreed period, for example on a par with the length of time on a mortgage, and there is no alteration in the regular payments.  The premiums are high for this cover but you may be able to better your premium. Insurers are now seeking to provide reviewable policies where both the ailments covered and the premiums paid are looked at again every four years, which should cost a good bit less. That’s why you need cheap quotes for life insurance.

Ray Mottershead, group manager of the independent financial adviser division of Tesco, states that more people will highlight the reviewable cover options as they become better value than the guaranteed policy.

Bradford & Bingley still offers a guaranteed CIC but has put its charges up for that.  It has announced a reviewable policy as another choice.  Scottish Widows and Skandia have ceased to provide guaranteed CICs.

Reginald Morton, Protection Director at Tesco, states, “The reviewable price will be typically [around] 16% below the guaranteed option.”
A current guaranteed CIC policy cannot be updated to redefine any illnesses which are now classed as ‘life-threatening’ but which may not be classed that way in the future.  So if you have this already and are satisfied to pay the financial amounts you do not have to be concerned.

If you are deciding to take out a CIC policy be ready to get better value for a reviewable scheme.  But if you want the extra peace of mind a guaranteed policy provides, grasp it fast while there are still some available, and don’t forget you’ll have to pay more.