How Much Critical Illness Cover Do I Need?
Working out how much Critical Illness Insurance you need can be tricky. How much Critical Illness Cover is enough? Use our 2024 guide to work out how much insurance is right for you.
Critical Illness Cover is designed to pay out a lump sum if you’re diagnosed with a serious illness as defined by the policy terms.
The cost of Critical Illness Cover is something that can be adjusted in several different ways by tweaking your policy. The major four factors you can adjust to influence the cost of your premiums are:
Another factor that will influence the cost of cover is the number of conditions your policy protects against which can vary from insurer to insurer.
This is how much the policy will pay out in the event of you being diagnosed with a critical illness (or passing away, if you’ve opted for Life and Critical Illness Insurance combined). The larger the sum assured, the more the policy will cost.
Look out for partial payouts for certain less serious conditions.
Critical Illness Cover may not pay out the full sum assured if you suffer from a less severe or ‘minor’ version of a serious illness, e.g. a small stroke or early stage cancer.
It is important to read the policy terms so you have a clear understanding of the illness definitions.
Samantha Haffenden-Angear
Independent Protection Expert at Drewberry
Many Critical Illness Insurance policies can offer cover all the way into your 70s (providing you start the policy before a certain age).
However, the longer you choose to cover yourself for and the higher your age at the end of the policy, the more it will end up costing.
This is because premiums reflect the risk posed to the insurer, and the risk of developing a serious illness becomes much greater the older we become.
Given the cost of cover increases the longer the policy is held, it therefore makes sense to carefully consider how long you really need the insurance for.
There are two main types of premiums for Critical Illness Cover:
With little to no control over the long term cost of reviewable premiums it often makes sense to pay a little more from the outset for guaranteed premiums knowing you are not going to have any nasty surprises in the future.
With Critical Illness Cover, you can have level or decreasing protection.
Decreasing cover is cheaper than level cover because the risk to the insurer in terms of the size of the payout falls over time.
Although this is not something you can control directly each insurer is unique in the number of serious illnesses they will cover and the definitions of these illnesses which constitutes a valid claim.
It is important to have a good look through the policy wording as no two policies are the same. If you are only taking into account the price in your decision making you could end up unknowingly comparing apples with oranges.
Most policies cover around the same number of conditions, but the definitions of those conditions could vary extensively.
All advisers at Drewberry have access to a sophisticated tool to work out which provider is most likely to pay out for someone like you.
Victoria Slade
Independent Protection Expert at Drewberry
While part of the cost of Critical Illness Insurance is under your control in terms of the policy factors you can adjust such as the length and level of cover. There are also individual factors about you that impact on the cost of the policy which you can’t change.
It’s a simple fact of life that, the older we get, the more likely we are to suffer from a critical illness, and insurers will take this into account when calculating the price of a policy.
The older you are when the policy starts, and the older you are when you wish the policy to end, the more Critical Illness Insurance will cost.
Your current state of health is very important when taking out any protection cover. This includes factors such as your height and weight.
Any quotes you receive online are based on the assumption you’re in good health – if this isn’t the case, the cost of Critical Illness Insurance may be higher or exclusions may be applied.
As well as your current state of health, an insurer will want to know the medical history of you and your family. Based on your medical history, the insurer may do one of three things:
You’ll be asked certain questions about your lifestyle when applying for a policy and, again, the greater the risk you’re deemed to be, the higher the cost of your premiums. For example, your level of alcohol consumption will be considered as well as any higher risk you may partake in.
It is usually the case that if you have a dangerous hobby, such as rock climbing or motocross racing, the insurer is likely to place an exclusion on the plan rather than increase the premium, although this will depend on the hobby and insurer.
Smokers are more likely to suffer from critical illnesses, including cancer, heart attacks and strokes, which make up around 80% of all Critical Illness Insurance claims.
As such, smokers pay more for this type of cover to reflect the increased risk to the insurer.
Giving up smoking has obvious health benefits but also financial benefits – the cost of Critical Illness Cover could as much as halve if you were to quit smoking.
You need to be free from tobacco and nicotine replacement products for a year before being eligible for non-smoker rates.
Sam Barr-Worsfold
Independent Protection Expert at Drewberry
The cost of most Critical Illness Insurance policies usually factor in Life Insurance as standard.
Life Insurance generally comes as an additional benefit when purchasing Critical Illness Cover – it’s unusual to buy standalone Critical Illness Insurance.
Often, adding Life Insurance will cost the same as buying a standalone Critical Illness Policy so it makes sense to take advantage of this valuable additional protection.
It can be very difficult to work out how long a lump sum would realistically last in the event of a severe illness so we often end up talking to our clients about Income Protection as an alternative.
Income Protection is designed to replace your wages if you can’t work due to any accident or sickness preventing you from doing your own job. It provides you with a steady income to meet your monthly financial commitments rather than a single lump sum.
To ensure you are making the right decision when it comes to choosing the most suitable type of protection for your circumstances read our Critical Illness Insurance vs Income Protection guide.
Below are some examples of how much Critical Illness Insurance costs depending on a person’s age, length and type of cover and smoker status.
A healthy 25-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:
A healthy 40-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:
A healthy 55-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:
With health and lifestyle having a significant impact on which Critical Illness Cover may be the most suitable it can end up becoming a minefield trying to compare policies.
We have tools in-house which take account of both the definition of the illnesses covered and your personal circumstances helping to make those comparisons to find the most suitable cover far easier.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.
If it is all getting a little confusing and you want to talk through your options to make sure you find the most suitable cover please don’t hesitate to get in touch.
Pop us a call on 02084327333 or email help@drewberry.co.uk.
Samantha Haffenden-Angear
Independent Protection Expert at Drewberry