Individual critical illness (CI) sales remain intrinsically linked to the buying of a home.
But as the population continues to put off the purchase of property to later in life, the individual CI market has had to adapt by focusing on younger demographics and renters who may never climb the property ladder at all.
A further concern is the ongoing cost of living crisis which has led to insurers to adjust offerings accordingly.
All of this means continued education by insurers, advisers and the entire industry is vital to ensure customers benefit from this most important cover.
Cost of living
“The cost-of-living squeeze means families are reassessing protection gaps,” Joanna Streames, managing director at Velvet, tells Health & Protection.
“Uptake is flat overall, but we’re seeing growth in budget or modular CI,” Streames adds.
Just for the wealthy
Stuart Lowe, director of risk and protection at Broadway Insurance, raises fears about the implications of rising premiums.
“If this continues like it has, eventually CI will only be affordable for the wealthy,” Lowe warns.
“I don’t know what the answer could be, maybe into policies where it covers cancer only, etc.
“With some insurers the additional benefits and services are very sparse, as an industry it would be good to offer more as early intervention or to ensure the client doesn’t become a claimant.”
Resisting rate increases
Rod McKie, head of product development at Zurich, maintains providers are trying hard not to increase rates.
“This is despite an uncertain set of dynamics such as the rise of new screening capability which could increase or accelerate diagnosis and the potential for the right for cancer to be forgotten as part of an application process,” McKie explains.
“All of which would lead to potential price increases,” he continues.
“As such having a fully flexible CI plan, that can be tailored to each individual customer’s needs at initial sale and then updated through the term such as the removal of children’s cover, is essential in trying to balance the affordability of cover with customer need.”
Pragmatic approach
Mike Farrell, protection sales and marketing director at LV=, tells Health & Protection that against these affordability concerns, some advisers are taking a pragmatic approach when it comes to critical illness, such as suggesting a multiple of salary as the sum assured rather than covering the whole mortgage.
“This approach emphasises that some level of CIC is better than none,” Farrell says.
“Alternatively, we’ve seen advisers recommend LV= income protection (IP), which includes parent and child cover with an element of CIC incorporated into the premium.”
More renters
But some market changes appear to be here to stay – such as the delay of property purchase into later years.
Fi Wynn, head of proposition at Royal London, tells Health & Protection: “We continue to see traditional drivers such as moving house or having children driving the most impact on demand, but we expect that the increasing number of people renting rather than buying should also be a driver of growth for covers such as critical illness and income protection.”
More renters has led to an increase in standalone critical illness sales – a trend Guardian has picked up on as Hilary Banks, commercial director at the provider, notes.
“Guardian’s seen an upwards trend in standalone critical illness sales between Q3 2024 and Q1 2025,” Banks says.
“The last four full quarters have been significantly up on the same period in the previous year.
“This broadly reflects the wider market trend – we know the standalone CI market overall is seeing positive growth – but we’re also really pleased to see our market share for CI has increased during this time – between Q1 2024 and Q1 2025.”
Ongoing value
But costs pressures are not the only factor driving consumer behavioural change.
Justin Taurog, CEO at VitalityLife, points to a shift in what consumers are looking for from their cover.
“People are increasingly wanting their protection to deliver ongoing value throughout the life of the policy, not just at the point of claim,” Taurog says.
“Earlier diagnoses, longer life expectancy, and recurring conditions are driving interest in products like our serious illness cover (SIC), which has been developed with the reality of modern-day illness at front of mind.
“Reflecting advances in medical technology, improved diagnostics, and better treatment outcomes, it allows multiple claims in full and covers a wide range of conditions, including many at lower severities,” Taurog continues.
“Interest in our dementia and FrailCare Cover also continues to grow as awareness of and concerns around later-life care continue to grow.
“We have found that by giving our members the option to carry over any additional cover after the end of the SIC policy term to protect them against later life illnesses, they get further value from their policy.”
Evolving products
So insurers are having to continually evolve their products to meet emerging consumer demands.
Some of the key market adaptations insurers are turning to include tiered cover and evolving wordings, Scott Cadger, head of underwriting strategy and claims at Scottish Widows, tells Health & Protection.
“To address the cost-of-living crisis, insurers are introducing tiered CI policies, where customers can add further options to the base level of cover,” Cadger explains.
“This gives customers and advisers the choice to have a higher benefit level but with fewer conditions covered, or reduce benefit amounts but with a fuller product coverage.”
Refining definitions
Cadger adds insurers are refining the definitions of covered conditions to ensure clarity and transparency.
“This is done to ensure that the critical aspect of the cover continues to be the case and balance the cost with breadth of coverage,” he continues.
Staying informed
Aviva is another provider to note the evolution in condition wordings.
Daren Boys, protection portfolio distribution director at Aviva, tells Health & Protection: “Insurers are refining definitions not only to reflect medical advancements and changes in treatment pathways but also to improve clarity and ensure more claims are paid.
“These updates are often informed by claims experience, reinforcing the industry’s commitment to fairness and transparency.
“For advisers, this means staying informed is more important than ever.
“Understanding the nuances of product tiers and the implications of wording changes enables more precise recommendations and ultimately better outcomes for clients.”
Future proof wordings
But a further concern is the “future proofing” of these wordings, Alan Lakey, director at Highclere Financial Services and CIExpert, tells Health & Protection.
“The overriding concern for insurers and reinsurers is how to future-proof wordings without inhibiting sales,” Lakey says.
“Also, it is clear that breast cancer is the highest area for claims and this has cost repercussions,” he continues.
“The two-pronged approach has been successful for companies like Aviva, HSBC, L&G and Zurich as it enables savvy advisers to show how a relatively small premium uplift can add a wide range of additional conditions.
“For most advisers CIC, indeed most protection plan take-up, is galvanised by the mortgage market which is steady but not booming.
“I imagine this year’s sales will be similar to last year.”
Continued education
Ultimately though, against these prevailing trends, the continued education of customers remains paramount as James Shattock, managing director, UK protection at Legal & General, tells Health & Protection.
“Continued education is essential so that people understand the financial risks that critical illness cover can mitigate, as well as the peace of mind it can provide should a person be diagnosed with a critical illness,” Shattock says.
“The physical and emotional strain of being diagnosed with a critical illness is immense and having a policy in place can significantly reduce the stress of managing finances during an already trying time.”