What Type of Premium Should You Choose for Critical Illness Cover?

Because of a growth in the popularity of insurance policies, especially critical illness policies, there has been an exponential growth in the number of UK residents that have chosen to take out Critical Illness protection plans to cover them and their financial positions in the event of suffering a critical illness of one form or another. Having the benefit of paying out a lump sum cash amount if a valid claim is approved, meaning that the insured individual successfully meets the policy requirements and survives the standard waiting period of 1 month, means that financial security can be possible, taking one less worry and strain away from you.

Choosing between flexible and guaranteed premiums once had their dangers, especially within the earlier days of the Critical Illness insurance policy. The flexible premium option involved making payments that could rise or fall each month, much like variable rate mortgages, and these were (and still are) a great choice for those with the capabilities to afford varying payments. Guaranteed premiums simply are set out where regardless of the economic conditions; you pay a set amount every month and that amount won’t change throughout the length of your contract. However there was a great deal of issues with insurance companies who offered critical illness insurance policies that had large and tempting benefits and flexible or guaranteed premiums but things have since stabilised sufficiently.

Even today, pricing and cost still acts as the main catalyst behind the sale of any critical illness insurance policy. Definitely the main difference and always has been between both premium types, with guaranteed premiums being the most cost efficient over the course of time and flexible premiums offering exciting and often lower initial premium costs but also unpredictable price hikes that can happen overnight, especially every 5 years when the flexible rates are reviewed.

There has been a spate of large discrepancies regarding the conditions of critical illness insurance policies, with insurance companies promising protection against critical illnesses and then not paying out because technological and medical advancements and treatments have come on leaps and bounds, enabling more and more critical illnesses to be successfully treated. Those with insurance policies and expected to be paid out found (and still do today) and discover that what once could have been their demise can now be cured, returning them to a healthy state again.

On another layer, the cost of this technology has also played a big part in the increase of premiums meaning there is certain confusion about it all really. Popularity combined with expensive technology has enforced insurers to up the cost of their premiums. Combined with a massive increase in claims over the last few years has insurers looking towards paying out many more claims in the future, premiums could look set to rise even further. Flexible or Guaranteed premiums, the choice is yours and Critical Illness Insurance are here to assist you in making the right decision for you based on information you wish to provide.