Reasons for poor take-up of critical illness cover

"The distrust is often mirrored by the notion you can somehow muddle through, that the financial impact of cancer, heart disease, stroke and multiple sclerosis is surmountable. The reality is these and other devastating conditions can cause debt to be accumulated, homes to be lost and families to be torn asunder." 

Such comments could seem to be scaremongering to the uninitiated but statistics from official bodies and charities such as Macmillan and the British Heart Foundation (BHF) back up such statements.

If one takes just two of the most-common causes of critical illness: cancer and heart disease, it is clear far more people struggle on without CIC than actually have cover.

And companies are paying out on critical illness policies.

For example, in October, during Breast Cancer Awareness month, Zurich published statistics which showed more than 20 per cent of claims during the first half of 2016 were for customers with breast cancer. 

These payments amounted to more than £7.3m. Over the past five years, the insurer has paid nearly £72m to more than 1,000 people with the disease, making it the most claimed-for condition.

Lack of advice

Yet despite the clear need for proper critical illness cover for clients, research shows advisers are just not recommending it - or any other protection product for that matter.

Research from life and protection advisory firm, Specialists4Protection, showed 72 per cent of advisers believe there is a growing threat of people not having enough critical illness cover or life insurance.

This acknowledgement went hand-in-hand with an admission, however, as 8 per cent of the 51 IFAs polled said they had stopped selling life insurance to clients since 2011. 

A further 8 per cent said they had stopped selling CIC, and 11 per cent say they intend to stop selling CIC to clients.

The main reason for advisers not selling was because they "wanted to focus more on selling investment products", the poll said.

Paul Litster, managing director of Specialists4Protection, said: "The intermediary market is responsible for a huge level of sales of life and critical illness cover but as fewer intermediaries are selling this, the problem of people having no cover, or inadequate cover, increases."

Peter le Beau, founder of Le Beau Visage, adds the demise of bolt-on cover with mortgages has also led to a lack of selling.

He explains: "It has been hit by the drop in sales in the mortgage market and the general drop in protection sales."

Expense

According to Chris McNab, protection product manager at LV, cost is also a factor.

Mr McNab says: "CIC is relatively expensive in comparison to life insurance only."