Independent advice on private healthcare
Type of premium
Reviewable premiums may start off low, but tend to increase increasing every few years, or even every year. Critical illness insurance companies also retain the option to reduce benefits rather than dramatically increase premiums.
Renewable premiums are a variant of reviewable premiums, and are reviewable whenever the policy is due for renewal. This may be one year or five years.
Guaranteed premiums tend to be more expensive initially, but are fixed for the life of your policy, whether it is five or twenty-five years.
So, after a few years, that cheap reviewable premium may end up far more costly than the more expensive guaranteed rates. The extra peace of mind offered by a guaranteed rate may be worth having, although if you have a tight budget now but expect your income to rise faster in the future, then a reviewable premium may be better.
Basis of cost
Critical illness insurance companies set their own price. Although a few have a simple table of prices against benefits, this is rare for a full critical illness policy. Most policies are priced depending on:
- Cover chosen
- Sum insured
- Number of people covered
- Hobbies and activities
- Medical history
- Family medical history
The process may need details from your doctor, a teleunderwriting interview with medically trained underwriters, a medical examination, or extra information as well as the completed proposal form.
Waiver of premiums
A waiver of premiums benefit may be included or available for an extra charge. As your policy is ongoing, you still have to pay your monthly/ annual premiums if you are not working due to illness. This will apply even during the weeks or months of claiming.
A Waiver of Premium benefit effectively pays the insurance premium for the weeks/months/years you are ill.
Increasing benefits premiums
Benefits can often be increased without further medical evidence every year, usually in line with increases in average prices or earnings, sometimes subject to a maximum annual increase (often 10% a year). The premium goes up with the benefits.
Some policies also allow one-off underwriting-free increases (up to certain financial limits) on a life-changing event happening, such as marriage, the birth or adoption of a child or moving home and taking out a bigger mortgage. Extra premium applies here too.
Severity based critical illness
Unlike traditional critical illness cover that pays out the full sum assured for very serious, life-threatening illness, severity-based cover makes lower payouts for less serious cases.
This means that for less severe forms of cancer, for example, you would receive a benefit proportionate to the severity of the condition.
Reduced price for reduced cover
A few insurers have introduced premium reductions for when cancer or multiple sclerosis exclusions are made. This means customers with pre-existing conditions or family history can still get critical illness cover when the conditions are excluded and pay only for the level of cover they receive.
Lower premiums when health exclusions are added for cancer or multiple sclerosis is very positive for consumers.