How Much Does Critical Illness Insurance Cost?

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What is Critical Illness Cover?

  • 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
  • Most policies will typically cover around 40 serious conditions including heart attacks, cancers and strokes.
  • The cost of your Critical Illness Insurance will depend on your personal circumstances and a number of policy factors which we will explain in more detail in this guide.

Key Policy Factors Affecting the Cost of Critical Illness Cover

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:

  • Sum assured
  • Length of the policy
  • Type of premiums
  • Type of cover.

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.

Sum Assured

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.

Samantha Haffenden-Angear Independent Protection Expert at Drewberry

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

Length of Policy

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.

Type of Premiums

There are two main types of premiums for Critical Illness Cover:

  • Guaranteed Premiums
    Having fixed premiums typically works out cheaper over a full policy term whilst also providing peace of mind that the insurer cannot increase the cost of your cover and potentially make it unaffordable when you need it the most.
  • Reviewable Premiums
    These may be cheaper at the outset, but they usually increase over the course of the policy. This could be, for example, if the insurer experiences higher claim levels than anticipated, or if a major change in interest rates increases its cost base.

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.

Type of Cover

With Critical Illness Cover, you can have level or decreasing protection.

  • Level Term Cover
    This type of cover remains fixed throughout the length of the policy, so if you took out £100,000 worth of cover the policy would be worth the same on the first day as the last day.
  • Decreasing Cover
    The level of cover falls across the policy term, typically in line with a repayment loan such as a mortgage.

Decreasing cover is cheaper than level cover because the risk to the insurer in terms of the size of the payout falls over time.

Number of Conditions Covered

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.

 Victoria Slade Independent Protection Expert at Drewberry

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

Personal Factors Affecting the Cost of Critical Illness Cover

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.

Age

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.

Health and Medical History

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:

  • Offer the policy on its standard terms
  • Place an exclusion on the policy relating to a pre-existing condition you may have
  • Cover any pre-existing conditions but charge a higher premium to reflect the increased risk.

Lifestyle

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.

Smoking

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.

Sam Barr-Worsfold Independent Protection Expert at Drewberry

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

Adding Life Cover

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.

Critical Illness Cover vs Income 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.

Examples of how much Critical Illness Cover costs

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.

Cost of Critical Illness Cover for a 25-Year-Old

A healthy 25-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:

Level Life and Critical Illness
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🚬
£27.73 per month
£39.06 per month
Decreasing Life and Critical Illness
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🚬
£18.94 per month
£24.54 per month

Cost of Critical Illness Cover for a 40-Year-Old

A healthy 40-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:

Level Life and Critical Illness
🚭
🚬
£47.89 per month
£73.79 per month
Decreasing Life and Critical Illness
🚭
🚬
£33.23 per month
£54.71 per month

Cost of Critical Illness Cover for a 55-year-old

A healthy 55-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:

Level Life and Critical Illness
🚭
🚬
£109.44 per month
£215.94 per month
Decreasing Life and Critical Illness
🚭
🚬
£72.00 per month
£128.29 per month

Instant Critical Illness Insurance Comparison

To get a better idea of policy prices and cover levels for your particular situation, try our quick and easy online Critical Illness Insurance comparison service.

The results table will show you a comparison of the top UK insurers and the cost of their policies based on the options you have chosen including the level of cover, length of cover and whether premiums are guaranteed or reviewable.

Samantha at Drewberry was very thorough and diligent setting up my policy - would recommend!

Gilda Maurice
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