Critical illness policies made their appearance in the UK during the mid 1980’s. Having encountered some problems at the beginning, critical illness cover made a real success during the 1990’s. In the year 1999, around 800,000 critical illness policy sales could be counted. The amount then gradually increased to around 3 million. Researches showed that around 10 percent of the working population in the UK possessed critical illness cover during the year 1999.
As a matter of fact, critical illness products may have been more sought and more successful than income protection plans. Furthermore, according to Munich Re, during the year 1998, new critical illness insurances under life regular premium businesses amounted to around 23.6 percent. Around 86 percent may have been prepayment while about 14 percent may have been additional payment policies. Prepayment policies may be bought with endowment, term or whole life policies. It may also grant a prepayment of practically whole of the sum insured. Moreover, people may have mostly chosen the mortgage field as it showed a gradual increment. In the year 1998 around 40 percent of mortgage policies may have been sold as a prepayment to critical illness. This practice may have been adopted so as to protect loans in case a critical illness occurred. Globally, around two third of policies during 1998 may have been related to mortgage. Additionally, at first, around six critical illness conditions may have been covered in the UK. These were: cancer, heart attack, stroke, kidney failure, coronary artery bypass graft and major organ transplant. These critical illness conditions eventually increased. Nowadays around 30 critical illnesses may be covered. However, it is believed that this process may be reaching to a stop sooner or later. There exists two critical illness products class currently: the basic critical illness cover and the extended critical illness cover. The basic cover may provide cover for around six to ten critical illness conditions. On the other hand, the extended cover may provide cover to around 30 or more conditions. It may be essential to also point out that many critical illness covers may now include TPD (Total and Permanent Disability). Consequently, in the year 1998, the ABI (Association of British Insurers) created the Statement of Best Practice for critical illness cover. This included the model definitions for the most important illnesses and also the model definitions and explanations for the most common exclusions. In addition to, model definitions may not have been mentioned for a critical illness like TPD. The reason may be because every insurer found his own way of defining the critical illness. However, finding the right definition for this critical illness might have now become important. This can be derived by studying the abilities of daily living and functional ability tests. As a matter of fact, the raising standardisation of these insurance conditions may have made the aspect clear in the market. This had then reinforced the market of independent financial advisers. Along with the South African market, the UK market may be the two most successful markets for critical illness insurance. The adoption of critical illness cover had been gradual in the UK as well as in South Africa. Reports may show similarity in both of these markets to some extent. But some options of critical illness cover like reinstatement of critical illness cover may have been successfully adopted in South Africa in contrast with UK. Insurance in the UK may still be evolving. It remains to be seen how further critical illness cover goes.
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