Compare Life Insurance

Critical Illness Cover (CIC) disburses the full amount insured, which is tax-exempt, if you are diagnosed with a life-threatening disease which prevents you working.

Insurers are finding that while life insurance claims are falling, they are having to honour more and more claims on CIC plans.  The effect of this is that the cost of CIC is becoming a higher cost than life assurance plans.  If the magnitude of CIC claims go down then understandably the cost of premiums will fall too.

The cost of Direct Line and Swiss Life’s CIC has gone up by about 20% and 25% respectively.  But the likes of Liverpool Victoria and Scottish Equitable win in the price increase race with increases of up to sixty five per cent. Other insurance companies are looking to charge more for CIC as well as the sector believes over the meaning of ‘life-threatening complaint’ and medical science makes great improvements in the management and control of individual conditions.

The ABI has examined cover for heart issues and stomach cancer, for example.  If these ailments are diagnosed early on they are no longer deemed to be ‘life-threatening’, at least for some sufferers.  Another example is diabetes.  Today BUPA is the only insurance provider which still allows this ailment on its inventory of critical health conditions covered.

A CIC plan usually runs for an agreed period, for example tied in with the length of time on a home borrowing requirement, and there is no movement in the fees.  The fees are costly for this protection plan. Insurance firms are now seeking to offer reviewable schemes where both the medical issues covered and the regular payments paid are looked at again every six years, which should be cheaper.

Ray Mears, senior director of the independent financial adviser division of Tesco, states that more people will choose the reviewable cover options as they become more cost effective than the guaranteed policy.

Aviva continues to provide a guaranteed CIC but has put its regular payments up for that.  It has launched a reviewable cover option as an alternative.  C&G and John Lewis have stopped providing guaranteed CICs.

Ray Morton, protection director at Aviva, states, “The reviewable cost will be in general [around] 15% lower than the guaranteed option.”
An existing guaranteed CIC plan cannot be altered to redefine any illnesses which are ususally classed as ‘life-threatening’ but which may not be defined as that in the future.  So if you have this already and are delighted to pay the premiums you don’t have to be troubled.

If you are planning to take out a CIC scheme anticipate to pay a smaller amount for a reviewable scheme.  But if you want the extra peace of mind a guaranteed plan supplies, take it while there are still some present, and don’t forget you’ll have to pay a little more.