How Much Does Critical Illness Insurance Cost?

Policy Factors That Affect The Cost Of Critical Illness Cover

We’re often asked, “How much is Critical Illness cover?” and the truth is, there is no one-size-fits-all answer. What you will pay will likely differ from what a friend or neighbour might pay because the cost depends on a variety of personal and policy-related factors.

Unlike personal factors e.g. your age & health, you can alter certain policy factors which can have a big impact on how much you pay for a policy. We look at these in more detail below.

Number of Conditions Covered

Each insurer is unique in the number of serious illnesses they’ll cover (and the definitions of those illnesses). So depending on which insurer you go to, you might get covered for more sicknesses at a lower price. If you’re only taking into account the price in your decision-making you could end up comparing apples with oranges.

No two policies are the same, so it’s really important to have a good look through the policy wording before taking out Critical Illness Insurance.

Sum Assured

This is the amount of money your Critical Illness Cover will pay out if you’re diagnosed with a critical illness (or in the case of your passing, if you’ve chosen a combined Life and Critical Illness Insurance policy). The higher the sum assured, the higher the cost of the policy.

Be aware of “partial payouts” for less serious conditions. Some Critical Illness Cover policies may provide a reduced payout if you’re diagnosed with a less severe form of a serious illness, such as a minor stroke or early-stage cancer.

It is important to read the policy terms so you have a clear understanding of the illness definitions and what level of payout to expect.

Samantha Haffenden-Angear
Independent Protection Expert

Length Of Policy

Many Critical Illness Insurance policies can provide coverage well into your 70s, as long as you start the policy before a certain age. However, the longer the policy term (and the older you are at the end of it), the higher the cost. This is because premiums are based on risk, and the likelihood of developing a serious illness increases as we age.

Given that the cost of Critical Illness Cover increases the longer the policy is held, really consider how long you need the insurance for.

Type Of Cover

There are two main protection types with Critical Illness Cover: 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 Critical Illness Cover, the policy would be worth the same on the first day as the last day.
• Decreasing Cover
  In contrast, Decreasing Critical Illness, sees the level of cover fall across the policy term, typically in line with a repayment loan such as a mortgage.

If you want cheaper Critical Illness cover, opting for a decreasing cover is the way to go. This is because the risk to the insurer (i.e. the amount they’ll have to pay out) gets smaller over time.

Type Of Premium

There are two main types of premiums for Critical Illness Cover: Guaranteed and Reviewable.

Guaranteed premiums remain fixed throughout the policy term, while Reviewable premiums can be changed by your provider at any time, often based on factors such as changes in the market, meaning your costs could increase over time.

• Guaranteed premiums
  While they cost more at the start, guaranteed premiums typically work out cheaper over a full policy term. Plus, having a fixed premium provides peace of mind that the insurer can’t suddenly raise prices, making cover unaffordable when you need it the most.
• Reviewable premiums
  These may be cheaper at the outset, but they usually cost you more over the course of your policy. For example, if your Critical Illness provider experiences higher claim levels than anticipated, or if a major change in interest rates happens, your premiums could shoot up in price.

With little to no control over the long-term cost of Reviewable premiums, we usually advise to pay a little more for guaranteed premiums and avoid any nasty surprises in the future.

We’re always here if you’re looking to buy Critical Illness Cover: give us a call on 02084327333 or email help@drewberry.co.uk.

Alex Weir
Independent Protection Expert

Personal Factors That Affect The Cost Of Critical Illness Cover

Your individual circumstances will also play a big part in the cost of Critical Illness Insurance. An insurance company will look at your:

Age

It’s sad but true: the older we get, the more likely we are to suffer from a serious illness. Insurers take this into account when calculating the price of your Critical Illness policy.

The older you are when you first take out the policy – and the older you are when you wish the policy to end – the more your Critical Illness Cover will cost.

Medical History

Your current state of health is very important when taking out Critical Illness Cover. This includes factors such as your height and weight.

Any quotes you find online will be 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 you might not be covered for certain illnesses.

As well as your current state of health, an insurer will want to know the medical history of you and your family. Based on this, 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 Critical Illness Cover policy. The greater the risk you’re deemed to be, the more you’ll pay each month. For example, if you smoke, drink a lot of alcohol, or take part in extreme sports, you’ll be considered high risk.

In some cases, an insurer can place an exclusion on your policy (meaning you won’t be covered for certain illnesses/injuries) instead of hiking up your premium. But it all depends on which provider you go to.

Smoker Status

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 it can also be kinder to your wallet. The cost of Critical Illness Cover could be cut in half if you kick the habit.

You’ll need to be free from tobacco and nicotine replacement products for a year before being eligible for non-smoker rates.

Rauri Taylor
Independent Protection Expert

Average Cost of Critical Illness Cover

To give you a better idea of how much Critical Illness Cover will cost per month, we’ve put together some example quotes below based on different policy and personal factors.

We have opted for a combined Life and Critical Illness policy because, as a rule of thumb, we don’t tend to recommend standalone Critical Illness Cover unless you have ample Life Insurance elsewhere. The quotes are based on:

• A healthy 35 year old, non-smoker
• £100,000 of Critical Illness cover
• £100,000 of Life Cover
• Guaranteed premiums
• 25 year term, with level cover.

Providers

Due to the fact different providers have different appetites to risk the premiums they charge will vary, even if the cover they are offering is the same. It’s always worth shopping around different providers before taking out a policy.

Different Providers
£30.13	£35.37

Quotes correct as of October 2024

Age

As mentioned the older you are the more your premiums will be. Using the same examples as above we have put together a number of quotes from Vitality to show you the cost of cover for different ages.

Type of Cover

Due to the fact Decreasing cover reduces over time it provides a cheaper option to a policy with Level cover. Using the same healthy 35 year old from above we have provided quotes from Vitality below.

Smoker Status

It’s no secret that smokers are at a higher risk of suffering from certain health conditions. As a result they will be charge higher premiums compared to those that don’t consume nicotine.

Cost Difference Between Critical Illness Cover And Income Protection

Critical Illness Cover offers a one-time, tax-free lump sum payment in the event of a serious illness. While Income Protection Insurance provides a monthly income if you’re unable to work.

It can be hard to know exactly when you’d receive your Critical Illness lump sum after making a claim. Which is why we often suggest Income Protection as an alternative.

The cost of Critical Illness cover is influenced by the specific illnesses or injuries you choose to include in your plan. While the price of Income Protection primarily hinges on the risk level associated with your occupation.

Learn more about the differences between the two in our Critical Illness Insurance vs Income Protection guide.

How To Reduce The Cost Of Critical Illness Insurance

There are several ways you can lower the cost of your Critical Illness Insurance, while still ensuring you have the cover you need. Here are a few options to consider:

• Lower The Sum Assured
  Choosing a smaller payout amount can significantly reduce your monthly premiums. Make sure it’s enough to cover your essential financial commitments, like mortgage repayments or household bills.
• Shorten the Policy Term
  The shorter the term of your cover, the lower your premiums will be. However, it’s important to ensure your cover lasts for as long as you need, such as until your mortgage is paid off or your children become financially independent.
• Consider Basic Cover
  If cost is a concern, you may opt for a more basic policy that covers fewer illnesses. While this reduces your protection, it can also lower your premiums.
• Lead a Healthier Lifestyle
  Factors like smoking, being overweight, or having existing health conditions can drive up the cost of your cover. Quitting smoking or improving your overall health could lead to lower premiums.
• Guaranteed vs. Reviewable Premiums
  While guaranteed premiums offer stability, reviewable premiums might start lower, though they can increase over time. If you’re looking for lower initial costs, reviewable premiums could be an option, but keep in mind they may change.

How To Get The Best Price For Critical Illness Cover

The best way to buy Critical Illness Insurance is to go through an independent adviser. While comparison websites can show you prices, they might not tell you about the quality of the coverage.

To get the right protection, it’s important to first consider what you’d need financially if you were to become seriously ill. Some people opt for enough cover to pay off their mortgage entirely, while others choose a level that could reduce it or help with school fees. Once you’ve assessed your needs, you can start comparing policies and costs. At Drewberry, our experts can take care of the hard work, guiding you to the right cover for your situation.

Use our handy Critical Illness Calculator to get started or pop us a call on 02084327333.

Need Help Comparing Critical Illness Cover?

Finding the right Critical Illness Cover – at the best price – can be overwhelming. Luckily, we live and breathe insurance, and are ready to chat about what’s best for you.

Getting advice through us is free, and you’re fully protected by the FCA. No nonsense, just the right product at the right price.

We’re a friendly bunch. Give us a call on 02084327333 or email help@drewberry.co.uk.

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