If you can't work due to illness, having been diagnosed with a life-threatening condition, CIC should pay you a tax-free lump sum. At a feverishly high price.

Legal & General and Swiss Life have both put up their premiums by 20 to 25 per cent, but that is nothing when you see rises of 50 per cent from BUPA and Friends Provident, and a whopping 60 per cent from Scottish Equitable and Norwich Union. Liverpool Victoria has yet to announce where it will fit into this scale.

As medical science makes giant strides forward in diagnosis and treatment of once life-threatening illnesses, insurers are facing increasing claims on their CIC policies as opposed to their life policies, as people are living longer with illness than they would have a decade earlier.

In an effort to reduce the amount of claims, the insurance industry is redefining the term 'life-threatening'. It is hoped that reducing the number of claims should impact favourably on the soaring cost of CIC premiums.

For example, prostate cancer and certain heart problems are no longer deemed to be life-threatening, according to the Association of British Insurers. The killer disease, skin cancer, is no longer covered by a CIC policy until it is 'invasive'. Diabetes is another condition amended and BUPA seems to be the only insurance provider covering it now.

"Although this type of insurance was originally known as 'dread disease', many of the conditions currently covered by critical illness policies are becoming quicker and easier to detect and treat. Hence insurers have recently found themselves paying out on claims where the condition was not life threatening, which isn't the purpose of the policy," says Kevin Carr at broker LifeSearch.

Hitherto most insurers have sold guaranteed CIC policies which run for the agreed term, usually alongside a mortgage, with no change to the cost of the premium. If you already have one of these it won't be changed mid-term, so even if you have any of the 'down-graded' conditions you won't be penalised.

Cheaper than the guaranteed cover is the type of policy which is becoming increasingly common, and that is the reviewable policy. This is where the policy-holder's medical status and the premiums being paid are reviewed at intervals, usually every five years.

Legal & General is offering a reviewable policy alongside its more expensive guaranteed policy, but around 15 per cent cheaper. Some companies are now dealing only with reviewable policies. These include Skandia and Scottish Widows.

Rye Mills, group director of the independent financial adviser division of Liverpool Victoria , believes that the price difference will drive customers toward the cheaper reviewable policies. However he says, "At the end of the day there's a price to be paid for the peace of mind a guaranteed policy gives."

Conversely, Kevin Carr from LifeSearch is of the opinion that most people would prefer to have a guaranteed policy even though they are more expensive. His advice is to take one out now before there are any further changes made.

Readers please note : You should undertake your own background checks before taking any action on any aspect mentioned in this article. Some examples or quotes may have been taken from information available in the public domain where all the background details may not be available.Insurers do change policy conditions and underwriting approach. They will view each situation on its own merits.

You should be aware that details of the topics written about within the articles can change.Therefore, always check out the current position before taking any action.

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