Critical Illness Protection Myths

Blog | April 8, 2020

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Critical Illness
Pre COVID-19 Statistics

We largely view ‘death’ as the most likely ‘bad’ health event that could affect us across our working lives. Yet, from the right-hand chart above, you’ll see that, in reality, you’re far more likely to survive, and face a serious or even critical illness, and be off work for a lengthy period.

That said, this doesn’t mean that you should disregard taking out life cover, as research shows that, on average, around 272 UK adults, aged 18-65 die each day. (Source: Office for National Statistics, 2018 data, January 2020)

Consumers’ perceptions

  • 20% of consumers say they’re likely to die in their working life.
  • 14% of consumers say they’re likely to contract a critical illness in their working life.
  • 11% of consumers say they’re likely to go on sick leave for three months or more.

Critical Illness Risks faced by male and female of working age

(Both aged 30, non-smokers and plan to retire at 65)

  • The chance of dying in their working life – 4% male and 3% female.
  • Chance of critical illness in their working life – 13% male and 11% female.
  • Chance of being off work for two months or more – 26% male and 37% female.

(Source: Royal London, State of the Protection Nation, June 2019, referencing Pacific Life Re research)

Income Protection

Based on the data, of greater importance is to consider further protection that’s designed to lessen any loss of income should you face a serious or critical illness, or be off work for a lengthy period.

There are two product offerings that can help protect you in these circumstances:

  • Critical Illness Cover – pays out a lump sum when you have a specified critical illness.
  • Income Protection – pays you a percentage of your monthly income when you can’t work due to illness or injury.

Do they pay out?

Many assume that the plans don’t pay up, yet a massive 97.6% of all claims were paid out in 2018, equating to £14.5m a day! (Source: Association of British Insurers, 2018 data, May 2019 release)

Do I even need Critical Illness Cover?

This is a possible further misconception, particularly as you may feel that it’s difficult to contemplate needing a protection policy until you really need it!

Additionally, some will think that their employer will provide all of the support needed. This may be true, but do check your contract to establish the level of financial help you’d get, and (if it’s not for death in service) for how long. Balance this with the care you receive from the NHS, and the limited financial support from benefits such as Statutory Sick Pay and Universal Credit.

Mental Health issues

In recent years there has been a far greater understanding of the need to deliver real and financial support to those insured who may suffer a mental health issue. Also, those that have previously faced this might feel that they would then be excluded from taking out future cover, such as Income Protection. However, some insurers may now take a more considered approach, rather than the standard ‘accept’ or ‘decline’ decision-making.

Added-value benefits

The insurance industry recognises that a payout upon claiming may be the initial driver in setting up a policy. But it’s also aware that there is a real benefit – for both parties – if a relationship is maintained throughout the policy term, as reflected by the following examples:

  • Incentives to keep healthy.
  • Specialist support – such as GP/nurse helplines, telephone counselling, carer support services, consumer rights, early intervention and rehabilitation services.

With such a wide range of options on offer, do talk to us, and you may also be pleasantly surprised at how little a plan might cost.

As with all insurance policies, terms, conditions and exclusions will apply.


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