Think about this question ‘Could you afford to pay your monthly financial commitments if illness prevented you from working?’ A large proportion of us would say ‘No’. So without doubt we need to consider taking out insurance against unpredictable events. A typical critical illness policy would settle a tax free lump sum if the insurance policy holder is diagnosed with a potentially life threatening illness. The lump sum can be used in numerous ways. For instance, you could pay off your mortgage, make alterations to your home to accommodate a wheelchair, or simply settle your bills.

The coming months will see a big price rise, so if you haven’t got any insurance cover at the moment, now is the time to sign up. The cost of life cover has come down over the past 12 years. There are various reasons why this has happened. First of all the Aids epidemic, that was expected in 1980-1985 never occurred and secondly the recovery rate of those undergoing heart attacks and cancer has radically improved. These facts have allowed insurers. Protection insurance is regularly reviewed by Insurance Companies, when the number of claims for certain conditions are examined. Following such a review Norwich Union will be amending payments shortly, with the cost of life cover dropping slightly and the premiums for critical illness insurance cover going up. The Insurance Company is unable to say by how much, as the client’s situation and the sum covered fluctuate from person to person, but the increase should not be huge is predicting that there could be a rise of between 30 and 50 per cent in critical illness insurance premiums in the next few months. It also fears that guaranted premiums may either become unaffordable for many, or even cease to exist as a result of the unsound marketplace.

Swiss Re has said that it will not underwrite critical insurance policies from the end of the year as the cover is costing them too much.

The cost of insurance has been put up by two major insurance companies.  A twenty to twenty five per cent risehas recently been broadcast by Scottish Equitable and Prudential. Nevertheless this is very little compared to the unbelievable price increases written into the covers now offered by Friends Provident and BUPA, which fluctuate between 50 to 60%.

It is plain that this trend will be followed by other re-insurers. Fixed rates where the monthly price is held for a specific period, typically ten years, may no longer be offered by insurersInsurance Companies.  In future, paymentswill be reviewed annually, just like motor and home insurance. The outlay for the customer will be much more in the long term. The message is crystal clear. Critical illness cover is becoming more costly so purchase it now to benefit from guaranteed rates and the moderately low premiums being givenat present. Let us wish that you will never have to claim, but statistics indicate that unfortunately many of us will.

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