Critical Illness Articles
Critical Illness Cover Policies Increase as Economy Improves
Economic indicators show that the national and global economies are once again improving. Unemployment is stabilising, inflation is increasing, and more money is being spent by consumers on financial protection plans such as critical illness cover.
Critical illness cover has been a successful insurance product since it was introduced to British markets in the 1990s. However, as economic climates tighten, so do the wallets of consumers. Critical illness covers experienced slow growth since the global economic crisis began in 2007. However, once again, people are seeing the value of protecting their financial situation, especially after high unemployment rates became devastating for millions of UK residents.
Insurance companies are seeing an increase in the market share of critical illness policies. New business is on the rise, but stand-alone critical illness policies are still slow. About 17% of all critical illness policies are single, lump-sum policies that are not a decreasing amount or attached to a life insurance cover.
Critical Illness Cover and the Mortgage Market
As the economy has begun to improve, so has the mortgage market. More homes are being sold and new homes built. Alongside new mortgages, critical illness covers are also on the rise, with 58% of all critical illness cover policies being mortgage-related.
People realise the value of protecting such a large investment. Whether it is unemployment or severe illness or injury that may cause disability, people with families must find a way to replace their income and keep their homes.
Many critical illness covers provide a benefit specifically to pay off a mortgage balance should the insured become critically ill. This is a decreasing benefit that reduces year after year, along with the mortgage balance. This makes a mortgage critical illness cover an affordable and wise option to help critically ill people from losing their homes.
Mortgage companies also see the value in protecting the mortgage from defaulting. Thus, many mortgage companies have made it a requirement for a home loan borrower to purchase a mortgage critical illness cover, with the mortgage company as the beneficiary.
Insurers Add Value to Critical Illness Covers
To help boost sales of critical illness covers, many insurance companies are making changes to their policies and policy language that benefit the consumer. These changes make it easier for consumers to buy a policy, especially with the added value. Some of the changes include:
- Reducing the number of exclusions. Excluded conditions are the main reason for most claim denials. Easing the language and making fewer restrictions allows more potential claims to be approved.
- Adding additional conditions. Along with the ‘core’ critical conditions, insurers are adding additional insured conditions, such as blindness, loss of limb, and bacterial meningitis.
- Cafeteria plans. Many insurers are creating critical illness cover plans that help fit the consumer lifestyle. Customers can choose from a range of products and eliminate certain policy conditions that do not meet their needs.
With an improving economy and more flexible plans offered by insurance companies, critical illness cover plans are once again on the rise. If you are interested in a plan, talk to an independent financial advisor to help find the plan that meets your needs.
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