Almost six in 10 critical illness (CI) policy holders mistakenly think they will continue to have cover for future illnesses after they receive a pay-out.
This is according to research from Vitality Life which found that while two-fifths (41%) of UK adults said the top reason they would purchase life insurance is to provide financial security and protection for their loved ones, 57% of CI holders believed their plan will continue to cover future illnesses after they receive a pay-out.
However, Vitality points out unlike other types of insurance, traditional CIC ceases following a full pay-out, leaving clients uninsured, and potentially uninsurable, in the future.
These findings follow Vitality’s identification of a CI knowledge gap earlier in the month, which pointed to other CIC consumer understanding gaps, with half (49%) of those with CIC not aware of the conditions they would be covered for if they needed to claim.
Hayley Morris made two separate claims on her Vitality serious illness cover policy before the age of 40. The first for a pulmonary embolism in 2021, a condition unique to the cover, and the second for thymoma cancer in 2023.
When reviewing the results of the findings she said “While I never expected to claim on my serious illness cover, let alone twice, the fact that my cover continues to this day is incredible.
“Knowing there is financial protection in place for me and my family if anything else happens or if my conditions come back, that my daughter can have the money she might need in the future to get married, go to university, things like that, is a massive relief.”
Justin Taurog, managing director at VitalityLife, (pictured), said: “When we first identified the critical illness gap we were examining how well people understood what they were protected against, but these additional findings raised further concerns.
“If people believe they will be able to make future claims on their CIC policies, we have a gap, and it demonstrates how little consumers understand CIC.
“This highlights the difference a severity-based approach can have to people across the market, providing cover for a wider number of conditions at earlier stages and continuous cover that allows for multiple claims across a client’s plan, helping ensure consumers are not left uninsured and uninsurable.”
Zoe Priselac, managing director at Way More, said: “These statistics really bring to light how common the misconception is that people think their critical illness policy would continue to cover them and pay out again after they have made a claim.
“By understanding this protection gap, as advisers we can help to make sure people have the financial protection they are looking for, for longer, which is where products such as the severity-based cover Vitality offers, comes in.”