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&#39CI guarantees will stay but become more expensive&#39

Guaranteed rates will still be available in the critical-illness market in a year&#39s time, according to Lifesearch senior technical adviser Kevin Carr.

Following talks with reinsurers and providers, Carr says he is confident that guarantees will still be available next Christmas.

In Lifesearch&#39s inaugural quarterly protection market report, he warns that there are likely to be more rate changes in the new year, following 42 changes made this year by 16 key providers, but he believes that this volatility will calm down in the first quarter.

The report shows that guaranteed rates are continuing to climb but reviewable rates are getting cheaper and are currently 25 to 30 per cent less than guaranteed rates.

It says the price of life cover is flattening out but that 75 per cent of people who have life cover do not have their policy written in trust, risking potential inheritance tax bills.

Projections for this year suggest there will increases of between 10 and 15 per cent in sales of protection policies, except for income protection which is expected to reach a plateau.

Carr says: “The price gap between reviewable and guaranteed critical illness is widening by the week. Within six months, a reviewable policy could be as much as 50 per cent cheaper than the equivalent guaranteed product.”

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