Critical Illness Premiums Increase As More Patients Recover

Summary
The effect of advances in medical science on Critical Illness insurance. The payouts afforded by reviewable insurances.

payments for Critical Illness Cover are rising due to the intensifying number of claims and apprehension about medical advances in the future future. If you are diagnosed with a life threatening illness, Critical Illness Insurance gives you a tax free lump sum, which will aid you financially if you are unable to work, due to illness.

 Two major insurance companies will be increasing the cost of insurance soon. Legal and General’s payment will rise by 23 to 26 per cent and that of Swiss Life by 23 per cent. These increases are small when compared with the 54 per cent imposed by BUPA and Friends Provident and the 61 per cent announced by Norwich Union and Scottish Equitable. LV are still considering what rise they will enforce next month.

The insurance industry is in uncertainty as improvements in medical science aid patients to survive illnesses, which would have been life threatening only 9 years ago. The effect of this sea change in health cover is that life insurance claims are decreasing whilst settlements on critical illness insurance policies have seen a sudden increase. Consequently the cost of life insurance is going down, while that of critical illness insurance is growing swiftly.

In an effort to keep the price of premiums down, the AIB has changed the conditions under which cover is given for heart problems and prostrate cancer.

Many sufferers are now finding out that speedy recognition of these illnesses results in longer life expectancy. The conditions under which Critical Insurance policies make a pay out are being redefined. This change will help to reduce the number of claims and therefore decelerate the speed at which premiums are rising. (For example), critical illness insurance will not pay out for skin cancer unless it is invasive)

Henry Judd of broker’s LifeSearch says that critical illness policies at the moment cover conditions, which are simpler to diagnose and treat. Claims are consequently being settled for non-life threatening conditions, which is not the function of the insurance
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A review of the terms of many insurance policies is expected in the future. Critical Illness insurance cover for diabetes is being removed by PPP, which leaves Norwich Union as the only insurer that incorporates this condition.

 Reviewable life insurance quote are now being provided by a growing number of insurance companies. Illnesses and premiums covered by these policies are revised every few years. A standard CIC is a cast iron policy, which carries on for a set number of years. The premiums remain the unchanged whilst the cover is in force, which is normally the length of their mortgage. On the other hand this type of cover is becoming more pricey.

The Group Director of Friends Providents’s independent financial adviser division, Harrison Lloyd says that you have to pay the price for the assurance that a guaranteed policy gives. He says that customers are most likely to pick a renewable rather than a guaranteed policy as the build up in costexpands. While Aviva increases it’s CIC it is also launching a reviewable insurance therefore giving customers a choice. Royal London has withdrawn it’s guaranteed Critical Illness Insurance, whereas Scottish Equitable is only offering reviewable insurance.

It is expected that Legal and General’s reviewable price will be about 15 per cent lower than the guaranteed cover. If you have a guaranteed CIC it cannot be altered to add new definitions of illnesses.

You should also consider taking out a wills 

Freddie Harrrison from Tesco Finance believes that while premiums on reviewable insurance policies are possibly cheaper clients would much ratherhave a guaranteed insurance policy. He suggests that if you do not already have insurance it would be prudent to take it out post haste,| before, any further changes are announced.

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