A recent article in Moneyweek said that anyone wishing to cut costs should cancel pointless insurance cover.   Payment Protection Insurance was listed as a pointless insurance policy along with critical illness cover. 

In relation to critical illness cover the author suggested that the policy sounds great but there are plenty of exclusions and cover can be expensive.  The author was absolutely correct, cover can be expensive.  When everyone has a 1 in 3 chance of being diagnosed with some form of cancer in our lifetimes it’s going to be expensive to insure against that kind of threat.  The author suggested that instead of a critical illness policy people should consider building up a disaster fund instead.

Everyone should have a disaster fund anyway but if I have a £100000 mortgage and I am diagnosed with a critical illness in 2 years time then I would want my mortgage paid off.  I would want to make sure that at least my home was my own and that my wife and children always had a roof over their heads.  A disaster fund built up from 2 years worth of savings will not do that for me so I fail to see how critical illness insurance can be considered a pointless insurance.  I hope that the premiums I pay for critical illness insurance prove to be a waste of money in that I hope not to ever be in a position where I need to make a claim. I pay the premiums each month because I and my family want security that our home will always be ours, that if I am diagnosed with some kind of critical illness I can afford to pay for immediate private treatment rather than join the NHS waiting list.

Anyone not convinced by critical illness should look at the claims settlement history if they are in any doubt as to whether the policies pay out.