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Majority of UK workers have no insurance cover for critical illness

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Almost seven out of 10 UK employees have made no financial provision for costs they may incur in the event of a critical illness.

According to Canada Life Group Insurance, nearly half of respondents (49%) said in the event of a critical illness they would only be able to maintain their current standard of living for a maximum of six months.  

Despite the fact only 19% of respondents had critical illness cover, a significant number of respondents (65%) were aware of what this sort of policy involved and its benefits. This increased awareness - combined with the popularity of flexible benefit platforms - has led to growth in the critical Illness cover market in 2009 and Canada Life is confident this trend will continue into 2010.

But while some people have taken proactive steps to protect themselves against the financial implications of a critical illness, many have not. Two thirds of respondents said they would fund the associated medical and financial costs either by simply dipping into savings (38%) or relying on financial support from their spouse or family (36%).   

Almost one in 10 (9%) people had purchased mortgage payment protection and felt this would help them to meet their largest expense. Howeve, this is partial protection and they would still need to meet other bills. Shockingly 4% said they would be forced to take out a loan or credit card to pay for these costs and 6% said they would have to sell other assets.  

Despite the planned Government spending cuts later this month, the majority (70%) of those questioned said that they are relying on the state or the NHS to provide care should they need nursing during their illness. In addition, 13% believe this will be provided by the local council and 35% said they would have to rely on their spouse.  

Despite this lack of financial provision, UK employees are becoming increasingly aware of the prevalence of critical illness among their family and friends. According to data from the Office for National Statistics, one in three people will develop cancer at some point during their lives and 80% of respondents said that cancer was the serious illness that people fear the most.  

As awareness grows among the UK population of the availability of different types of employee benefits, it gives advisers the opportunity to educate employers about products such as critical Iillness cover. Employers can provide critical illness cover on a lower cost per capita than if their employees were to take out individual protection themselves.

The Canada Life research also found half of the respondents (53%) said they would accept a new job without a pay rise if the benefits offered were better and 55% said they would be prepared to take a lower paid job if it offered better benefits.

Paul Avis, director at Canada Life Group Insurance, said: "Despite being the only area of group risk that grew in 2009, there is evidently still a need for providers and advisers to raise awareness of the benefits of critical illness cover to the employers, and ultimately the employees, that we insure.

"We believe the research that we have undertaken clearly identifies employee enthusiasm for the product and so the challenge now is to maximise the opportunity this presents and support our advisers in gaining new group critical illness clients."