According to research from Vitality Life, around 57% of critical illness cover holders believe their plan will continue to cover future illnesses after they receive a payout.
However, with traditional illness cover, it ceases following a full payout, which the firm said could leave clients “uninsured, and potentially uninsurable, in the future”.
When looking at buying critical illness cover, good value for money was the top consideration at 89%, with nearly half of UK adults said they would be willing to pay higher premiums for the ability to claim more than once.
This increased to 64% of those aged 25-34.
Justin Taurog, managing director of Vitality Life, 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 raise 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.”
Earlier this month, it was found that over half of people with critical illness cover were not fully aware of the conditions covered.
