Critical illness cover is based on a list of illnesses and conditions for which insurance payouts will be made.
It is based on a 30-year-old model and at the time, if you had a listed condition, the chances of beating it or living more than a few months was low.
So, if you have an insured illness and a claim has been paid, then most insurers will no longer offer you cover.
But modern medicine means that some conditions are beatable, and others can go into remission for years, while even with some diseases, people can live for many years.
Traditional policies do not cover all areas of the body, nor do they cover all conditions within the body, and cover ceases after a claim. Sometimes policyholders are very ill but will not receive a penny because they do not have the right kind of illness.
Some argue that critical illness cover is becoming out of date as it fails in its primary purpose, which is to give people the money they need to do whatever is necessary to help prolong their life and maintain their standard of living, be it an operation, ongoing medical treatment or lifestyle amendments.
The world is changing. Medical science will always improve and generally speaking so will detection techniques and life expectancy. The incidence of a condition may decrease or increase over time and as such the financial need to cover some illnesses deemed critical a decade ago are no longer seen as necessary today. And some modern illnesses or medical procedures that are not widely covered today are likely to become more important in years to come.
Conventional critical illness cover pays out upon the diagnosis and does not link the payout to the severity of the condition.
Some insurers recognise that some conditions, such as early stage cancers for example, where the removal of a breast is required (mastectomy), warrant some payout instead of nothing at all. But once they payout is made, insurers may refuse to continue your cover - and if so declined, the chance of getting another insurance at an affordable price is remote.
A few insurers are moving away from traditional critical illness cover towards a more severity-based model, where the payout is directly linked to the severity of the condition. If you have a claim paid, and live for another ten years and a condition worsens or if a new illness is diagnosed, not only does cover continue but also further claims can be made.
The severity concept is literally moving the goalposts. The really important question is changing from 'will my claim be paid?' to 'how much will I be paid?'.
The good news is that a few companies now offer severity based cover. The bad news is that most are dragging their feet and effectively waiting for competitors to move in that direction before they do. Critical illness insurers have a herd-mentality; they agree wordings and definitions in cosy committee; make market agreements on what is or is not covered and so on. This is good as it makes it easier to compare policies, but bad as individual product development is restricted by fear of being different.
PruProtect introduced the concept of severity-based critical illness cover to the UK, but others have not followed.
The main reason insurers give is that severity-based cover is too complex and that you the customer would not understand it, which is patronising. Few of us understand how the electronics in our car works and would struggle to explain the systems, but we are perfectly capable of understanding the benefits of computer-controlled cars. Accepting insurer logic would mean we would still be driving cars from the 70s - the era when critical illness as it now is was conceived.
Types of cover: Index