29th July 2025

Critical illness cover: What advisers really need to know about additional payment conditions

Advisers are generally confident when it comes to selecting quality critical illness (CI) plans - definitions, incidence rates, and provider claims stats are all familiar territory. But dig into the additional payment conditions, and things get a lot more nuanced.

It’s here, beyond the 100% payment definitions, that advisers need to pay closer attention. Why? Because the way these additional payments are calculated can materially affect the payout, especially under decreasing term policies. And yet, these differences are often underappreciated in day-to-day recommendations.

Same phrase, very different outcomes

All insurers offering additional payment conditions use some variation of the phrase “the lower of”, usually referring to either a fixed maximum amount or a percentage of the sum assured. But that’s where the consistency ends.

For example:

• Guardian pays the lower of £50,000 or 50%
• L&G CI Extra pays the lower of £35,000 or 100%
• Aviva Upgrade pays the lower of £30,000 or 100%

When the sum assured is decreasing (as it often is on mortgage-related plans) these percentages really start to bite. A £100,000 policy might sound robust at outset, but by year 10, that sum could be reduced to £80,763. Under Guardian’s model, this would cap the payout at £40,381 (50% of the reduced sum). 

Does higher early payout trump long-term value?

Here’s where the decision gets tricky. Guardian pays more than L&G CI Extra for the first 13 years and 4 months of a typical 25-year term. After that point, L&G pays more - often significantly more. In the final few years, it pays double what Guardian would, and up to four times more than some other core plans like LV= or Scottish Widows.

Statistically, serious illness claims tend to increase later in life, so is the plan with higher early payouts really the better option? 

Real-life planning needs real-world comparison

The quality of the claim wording still matters, but so does the value of what will be paid, and when. Advisers need to weigh up whether superior definitions with capped benefits beat broader, higher-value payments under slightly weaker wording.

This is where a robust CI comparison tool comes into its own. A quality benchmarking system that factors in all additional payment conditions, across both adviser-distributed and D2C plans, makes it far easier to assess real-world client value, not just theoretical definitions.

If your client has a decreasing mortgage plan and is in good health today, what will offer them the most meaningful support if they claim in year 18, not year 3?

Table 1: “The lower of…” payout limits by provider 

Table 2: How Additional Payments Decline Over Time

Example: £100,000 decreasing term CI plan at 8% interest over 25 years.

Final thoughts

The additional payment calculation isn’t a “nice to know”, it’s a critical factor in delivering the right client recommendation. A robust CI comparison tool that includes these variables across adviser-distributed and D2C plans can help ensure your advice holds up not just today, but well into the future.

Alan Lakey, CI Expert

https://ciexpert.uk/features/

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