Such policies, which pay out a partial sum based on the severity of an illness and continued cover for more serious conditions, are also covering more illnesses today than last year, the research firm showed.
The number of conditions covered by severity-based clauses also increased, from 8 in May 2012 to 34 in May this year.
Ben Heffer, insight analyst for the life and protection division of Defaqto, said breast cancer was the most common illness covered by severity-based policies, followed closely by prostate cancer.
He added: “Severity-based cover caters for clients where, while the illness is not critical, it nevertheless gives rise to a financial need. Secondly, people with a critical illness policy might be able to claim on their policy for some illnesses, even though they are not really serious enough to generate a full payment.
“However, the severity-based cover and level of benefit offered by each provider varies significantly.”
Mr Heffer added that the severity clause was now an important factor for Defaqto when it rates critical illness policies.
Mark Dennison, director of Essex-based LightBlue UK, said: “Providers react to market demands and the public perceive severity-based cover as more comprehensive and fairer than a ‘black or white’ attitude. All providers will have to respond to the popularity of these types of policies and I think they will become a big part of the protection landscape.”