Big Changes On The Horizon For Critical Illness Insurance.

In recent years sales of critical illness insurance have flagged. The primary cause is the huge 70% increase in premiums experienced during recent years. For many, critical illness insurance has simply priced itself out of the market. 

It's not that critical illness insurance is a bad idea. After all it pays out a lump sum if the policyholder is diagnosed with one of the many critical illnesses listed on the policy and the policyholder survives at least 28 days from diagnosis. (Note: some policies have a 14 day survival period.) Most policies have a huge list of insured illnesses although about 60% of claims are for cancer � not surprising, as 1 in every 3 people will develop cancer sometime in their lifetime. In fact when you look at the concept of Critical illness insurance you can easily make a case that everyone living on earned income should have a policy. It's designed to give you a pot of capital to live on if serious illness prevents you from working normally. 

Premiums have increased dramatically because medical advances have meant that many illnesses that proved fatal in the past are becoming quicker to detect and easier to treat. Hence insurance companies have found themselves paying out earlier on claims and on illnesses which are not necessarily debilitating - which was the original purpose of critical illness insurance. 

To give you a better idea of the sort of illnesses we're talking about, here's a typical list: 

Alzheimer's Disease 

Aorta Graft surgery 

Bacterial Meningitis 

Blindness 

Brain Tumour 

Cancer 

CJD 

Coma 

Coronary Artery by-pass surgery 

Coronary Artery Angioplasty 

Deafness 

Heart attack 

Heart Valve replacement/repair 

HIV/AIDS resulting from blood transfusion 

Inability to perform your duties of occupation 

Kidney failure 

Leukaemia 

Loss of limbs 

Loss of speech 

Major organ transplant 

Motor Neuron diseases 

Multiple Sclerosis 

Occupational HIV/AIDS 

Paralysis 

Paraplegia 

Parkinson's disease 

Stroke 

Third Degree burns 

Any illness that results in Total and Permanent disability 

Insurance companies have at last realised that they're not going to get anywhere marketing policies that people can't or won't afford, and where the companies can't afford to lower prices. So it now looks as if insurers such as Scottish Widows are considering a break through � splitting the cover so that the prospective policyholder can specify which illnesses he or she wants to insure against. It's a form of �menu pricing� � cover for each illness would have a price and you simply select which illnesses you want to insure against. 

Whether such insurance proves popular will very much depend on the cost. For example, if cancer accounts for around 60% of current claims, you'd expect the premium for covering cancer alone to be about 40% cheaper than a full strength critical illness policy. We'll have to wait and see. 

If you're interested to find out how much a standard critical illness policy would cost you, you'll find it cheapest on the Internet. The best sites to look out for are the independent discounting brokers who deal with all the big insurance providers. These brokers can search the whole market for you, come up with the cheapest insurer, and discount their price. Try to use a broker who'll also give you personal advice on the phone as some policies do vary in the scope of their cover.