Top 10 critical illness insurance providers in the UK

Top 10 critical illness insurance providers in the UK

Many UK citizens face a high risk of developing critical illnesses, several studies have shown.

Recent estimates from Cancer Research UK, for instance, indicate that for people born after 1960, half of men and 45% of women are at risk of developing at least one form of cancer in their lifetimes.

The 2015 study conducted by the London-based independent charity group also revealed that males were more likely to be diagnosed with prostate cancer while females faced a higher risk of getting breast cancer. Lung, bowel, and kidney cancer rounded up the top five list of cancer types with the highest lifetime risk estimates among Brits, according to the research.

New data gathered by the British Heart Foundation (BHF), meanwhile, has shown that strokes hit more than 100,000 people in the UK each year, a figure that is equivalent to one incident every five minutes. The illness is also the single biggest cause of severe disability in the country, with about a quarter of cases happening to working-age citizens.

While not all severe medical conditions are fatal, surviving one often entails significant financial turmoil. This is where critical illness insurance comes into play. This supplementary insurance product gives policyholders financial cushion should they get seriously ill and need time off to recover.

How does critical illness insurance work?

Critical illness cover pays out a tax-free lump sum should the policyholder be diagnosed with one of the medical conditions listed in their policy document. Most insurance companies also require claimants to meet a certain level of severity for an illness and survival period – usually between 10 and 30 days – which are detailed in the product disclosure statement (PDS), before providing coverage.

Policyholders can often choose from several types of critical illness coverage, according to the independent personal finance website Money to the Masses. These include:

  • Standalone critical illness cover: This policy covers only the medical conditions diagnosed within the policy term. This is the most basic form of coverage and has the lowest premiums.
  • Combined life and accelerated critical illness cover: This covers either the critical illness or death, whichever comes first, but not both. 
  • Combined life and additional critical illness cover: This type of coverage pays out for both severe medical conditions and death. This policy also costs more compared to other forms of critical illness insurance.

What do critical illness policies cover?

Among the core conditions critical illness insurance typically covers are heart attack, cancer, and stroke, which are also the leading causes of disability in the UK. Most policies also offer coverage for the following medical conditions, provided that policyholders meet certain severity criteria and exhibit specific symptoms:

  • Alzheimer’s disease
  • Dementia
  • HIV infection
  • Kidney failure
  • Liver failure
  • Loss of limbs
  • Motor neurone disease
  • Multiple sclerosis
  • Parkinson’s disease
  • Permanent loss of vision or hearing

Policies, however, do not cover medical conditions that were diagnosed before application, even if they were listed in the policy document. Many insurers also exclude hypertension and non-invasive cancer, along with injuries such as broken bones, from coverage. The list of covered illnesses varies between insurance providers, with some offering more coverage than others.

Another key difference between insurance companies is how they define certain illnesses. To standardise how the industry defines different medical conditions, the Association of British Insurers (ABI) has published a guide, which lays out the minimum standards for critical illness that policyholders must meet to make a claim. But because these are only minimum standards, many insurance providers have come up with clearer definitions than those dictated by ABI, giving rise to what is known as ABI+ definitions. Adopting these definitions is now considered to be among the distinguishing characteristics of a good critical illness insurance policy.

How much does critical illness insurance cost?

Just like other types of insurance policies, several factors impact the cost of critical illness coverage. Independent online broker Anorak grouped these factors into two categories:

  • Lifestyle factors: Insurers consider a person’s overall health standing and habits, including age, medical history, and smoking status when calculating premiums.
  • Policy factors: Key policy features such as term length, type of coverage, number of illnesses covered, and add-ons also affect premium prices. 

What should UK citizens consider when buying critical illness insurance?

Money to the Masses listed several questions that Brits should ask in order to find a critical illness insurance policy that best suits their needs. These are:

  • How much cover do you need?
  • How long do you need cover for?
  • Do you want to combine critical illness and life cover in a single policy?
  • Do you want premiums to be guaranteed or reviewable?
  • Are there any medical conditions that you currently have or have had in the past?
  • How many and which critical illnesses do you want to be covered?
  • If diagnosed, at what stage will the payout be given?
  • How soon after the diagnosis do you need to make a claim?
  • Will the insurer provide the amount of cover and term you require?
  • Are the premiums within your budget?
  • What are the exclusions within the policy?
  • What is the insurer’s track record in paying out claims?
  • Does the insurer provide additional benefits such as children’s cover?

Top critical illness insurance providers in the UK

To come up with the list of the leading critical illness insurers in the country, Money to the Masses compared the policies from major insurance providers using a range of key metrics, including the number of conditions covered and illnesses that meet ABI+ definitions, policy limits, and claims payout. These are the ones that came on top. The list is arranged is alphabetically. The figures are up to date as of December 2021.

1. Aegon

  • Maximum benefit: Unlimited
  • Number of conditions covered: 39 (full), 12 (partial)
  • Number of child specific illnesses covered: 2
  • Number of illnesses with ABI+ approved definitions: 20
  • Survival period: 10 days
  • Claims paid: 93% in 2020, totalling £34.4 million

2. AIG

  • Maximum benefit: Unlimited
  • Number of conditions covered: 23 (full), 25 (partial)
  • Number of child specific illnesses covered: 19
  • Number of illnesses with ABI+ approved definitions: 16
  • Survival period: 10 days
  • Claims paid: £30.3 million in 2019 (latest available data)

3. Aviva

  • Maximum benefit: £3 million (£2 million with total and permanent disability cover)
  • Number of conditions covered: 33 (full), 2 (partial)
  • Number of child specific illnesses covered: 0
  • Number of illnesses with ABI+ approved definitions: 19
  • Survival period: 10 days
  • Claims paid: 92.7% in 2020, totalling £314 million

4. Canada Life

  • Maximum benefit: £750,000
  • Number of conditions covered: 52 (full), 44 (partial)
  • Number of child specific illnesses covered: 6
  • Number of illnesses with ABI+ approved definitions: 16
  • Claims paid: Undisclosed

Read more:  Top 10 critical illness insurance providers in the UK

5. Guardian 1821

  • Maximum benefit: £3 million
  • Number of conditions covered: 53 (full), 22 (partial)
  • Number of child specific illnesses covered: 6
  • Number of illnesses with ABI+ approved definitions: 18
  • Survival period: 14 days
  • Claims paid: Undisclosed
  • Maximum benefit: £3 million with work tasks TPD cover, £2 million with own occupation TPD cover
  • Number of conditions covered: 31 (full), 2 (partial)
  • Number of child specific illnesses covered: 0
  • Number of illnesses with ABI+ approved definitions: 17
  • Survival period: 14 days
  • Claims paid: 92% in 2020, totalling £202.5 million

7. LV=

  • Maximum benefit: Unlimited
  • Number of conditions covered: 49 (full), 38 (partial)
  • Number of child specific illnesses covered: 0
  • Number of illnesses with ABI+ approved definitions: 14
  • Survival period: 14 days
  • Claims paid: 92% in 2020, totalling £28 million

8. Royal London

  • Maximum benefit: £3 million (£1.2 million with increasing cover)
  • Number of conditions covered: 47 (full), 20 (partial)
  • Number of child specific illnesses covered: 0
  • Number of illnesses with ABI+ approved definitions: 14
  • Survival period: 10 days
  • Claims paid: 99.6% in 2020, totalling £591 million

9. Scottish Widows

  • Maximum benefit: £3 million (capped at £1.5 million for TPD claims)
  • Number of conditions covered: 30 (full), 10 (partial)
  • Number of child specific illnesses covered: 5
  • Number of illnesses with ABI+ approved definitions: 14
  • Survival period: 10 days
  • Claims paid: 98% in 2020, totalling £81.9 million

10. Zurich

  • Maximum benefit: £3 million
  • Number of conditions covered: 40 (full), 2 (partial)
  • Number of child specific illnesses covered: 0
  • Number of illnesses with ABI+ approved definitions: 16
  • Survival period: 10 days
  • Claims paid: 87% in 2020, totalling £64.7 million.

Author: insurance101

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