Summary

The incentives offered by life insurance cover are compared with the benefits of critical illness insurance cover. It is advisable to sign up for critical illness insurance now and the reasons why. 

Ask yourself this question If illness prevented you from working could you afford to pay your monthly commitments? The vast majority of us would say No. So surely we need to think about insuring ourselves against the unpredictable happening.

A normal critical illness policy would pay out a tax free lump sum if the insurance holder is diagnosed with a potentially life threatening illness. The lump sum may be spent in numerous ways. For example, you could simply settle your bills, pay off your mortgage or make alterations to your home to accommodate a wheelchair.

The next few months will see a sharp rise in premiums, so if you haven’t got any insurance cover at present, now is the time to sign up. The price of life insurance has become more affordable over the past 10 years. There are several reasons why this has transpired. To start with the Aids epidemic, that was probable in 1998-1984 never materialised and secondly the recovery rate of those undergoing heart attacks and cancer has vastly improved. These issues have made it possible for insurance companies to lower premiums.

The converse is factual for critical illness insurance policies where the amount of customers claiming has gone up significantly lately and as a result payments have risen. Protection is regularly re-evaluated by Insurance Companies, when the amount of claims for certified conditions are examined.

Following such a review AXA will be amending payments shortly, with the cost of life insurance falling slightly and the payments for critical illness cover rising. The Insurance Company is powerless to say by how much, as the individual’s circumstances and the amount insured for differ from person to person, but the increase should not be huge.

However Best Deal is predicting that there could be price rise of between 25 and forty five per cent in critical illness cover premiums over the coming months. It also suspects that guaranted premiums may either become unaffordable for some people, or even come to an end as a result of the unstable marketplace.

Swiss Re has declared that it is refusing to underwrite critical illness insurance policies from the end of December as the cover is costing them too much. 

The price of cover has been increased by two of the big high street insurance companies. A thirty to thirty five per cent price increasehas just lately been publicised by Prudential and Scottish Equitable. However this is very little compared to the incredible increases written into the covers now offered by Standard Health Care and PPP, which fluctuate between forty to fifty per cent.

It is presumed that this movement will be followed by all the other re-insurers. Fixed monthly preiums where the monthly cost is held for a specific period, typically 12 years, may no longer be offered by insurers.

Hereafter, paymentswill be reviewed each year, just like home and motor insurance. The outlay for the client will be much larger in the long term. The message is clear. life insurance is growing more expensive so buy it now to gain from guaranteed premiums and the moderately low rates being offeredat the moment. Let us pray that you never need it, but info indicates that a very high proportion of us will.