As we all know the risk of suffering from a critical illness (in most cases) increases as we get older. This is certainly the case for the more commonly claimed on critical illnesses. The risk of suffering from cancer, heart attack and stroke all start to significantly increase from age 40 and at older ages there is a massive spike in incidence of certain neurological conditions such as dementia especially once we pass age 65. With Old Mutual Wealth exiting the market earlier this year, the ability to take out a whole of life critical illness plan is now limited, so what are the maximum ages that critical illness can be covered to?
As with all protection plans the cost of critical illness will increase as the client becomes older and the risk of them claiming increases. For some this cost may be prohibitive to them obtaining the amount of cover meaning some form of compromise may need to be made. Where this is not an issue or a slightly lower sum assured is recommended, the maximum ages that insurers set out in their plans might be a factor in which plan is recommended.
When considering critical illness for older clients there are two factors to be aware of. The first is the maximum age at which the policy will offer terms (maximum age at entry) and the second is the maximum age to which the policy will cover a person (maximum age at expiry).
The ages these will be set at are often dependent on the type of plan and the basis that is set up on.
Low start plans such as AIG’s CIC Start set their maximum age at entry at lower ages. The AIG CIC start plan offers cheaper premiums at outset which increase over the term to reflect the increased risk clients face as they get older.
The basis on which the plan is set up may also provide variations in the maximum age. Some insurers will set different ages at which the plan can be set up dependent on whether it is based on level cover, decreasing cover or increasing cover. Legal & General set their maximum age at entry at a lower age for decreasing cover than level of increasing cover. LV= on the other hand set the maximum age at entry for increasing cover at a lower age than level and decreasing.
In terms of the maximum age at expiry of plan, there seems to be far more variation in the ages that insurers will allow a critical illness plan to run to when compared to life cover where most insurers allow up to age 89 or 90 (see here for full details). Like with life cover only LV= vary the maximum age at which cover to run to across Level, decreasing and increasing cover.
As can be seen, the maximum age that critical illness can run to is in some cases significantly lower than life only cover. At older ages it may be more difficult to obtain terms for clients as there is more likely to be health conditions present and underwriting will be far stricter than it is for life cover. In an ideal world clients would have taken out cover at a much younger age when it is more affordable. Where this is not the case and there is a need for critical illness, understanding which insurers will offer cover based on the clients age and desired period of cover may be beneficial.