When taking out critical illness insurance should I go for a guaranteed premium or a reviewable one?

You thought the hardest part was over – deciding upon whom you should insure with, the type of policy you should take out, the amount of cover you should go for, now you have the decision of whether or not to go for a guaranteed or a reviewable premium on your critical illness insurance policy. It can be a very confusing time; however despite this the choices you make now will undoubtedly affect you in the future. This may be in the ways of the policy paying out or the premium that you are charged later on so careful consideration needs to be taken when looking at this type of cover.

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The cost of crtical illness insurance is a debatable topic. Where this type of insurance is concerned the prices can fluctuate so much between companies. Premiums are usually on the up and it feels like they become so expensive so quickly. Typically at the moment prices are higher for people that are smokers, people that have or are involved in dangerous hobbies such as diving etc, or those that have a potentially hazardous occupation and other aspects that may only be brought to light upon application. There can be a number of reasons behind prices increasing on insurance policy which could be the amount of claims made with the company you choose to insure with, an increase in general costs, fraudulent claims and others. Whatever the reason may be, we need to consider what is best or more appropriate for potential clients.

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As with any type of insurance there are many different methods of payment that can be used. These can be on a monthly or an annual basis, and would tend to be set up via a direct debit. First of all you need to decide upon whether or not you want to pay monthly or not. This can spread the costs of your premium over the twelve month period. If you pay for a critical illness insurance policy on a monthly basis you are generally given two options and these are guaranteed and reviewable.

The difference between guaranteed and reviewable premiums is very easy to spot and each one can suit an individual in a different way, and in some cases one of them may not suit at all. A guaranteed premium is a set price agreed by both you and the insurance provider. This premium is guaranteed not to increase throughout the duration of the time that your policy is in force at any point. This means that you can budget your monthly outgoings and allow enough money for your critical illness insurance every month.

A reviewable premium is one that the insurance provider will generally review normally every five years. This is dependant upon the company you insure. These types of policies look rather appealing in the first instance because the premium may be lower than a guaranteed one, but there is always chance at its review that it could increase.

Wherever possible, given the choice, most of us would choose a guaranteed premium as it gives us the assurance going forward that relative to our income, the cost of our insurance will decrease. Often, a guaranteed price will only be marginally more expensive than a reviewable premium and given that once we are underwritten and approved the price of our plan will never change.

It may be that you are unable to decide for yourself on which policy would be best for your own individual needs. If this is the case then it is advisable to contact a financial adviser regarding your critical illness insurance policy.

Every insurance company offers different terms and conditions for their reviewable policies. If you are undecided it can be an advantage to get some documentation through the post for a comparison basis.

An insurance broker could also confirm the parameters each different insurance company use when reviewing the premium, which really needs to be considered prior to making any possible choice.