Why we're sick of being sold critical illness cover

The Which? researchers found a similar story at the banks and mortgage advisers they visited. Some advisers more or less left it up to the researcher to decide what type of insurance or level of cover they needed. For example, an HSBC ad viser, instead of explaining how different types of insurance worked, said: "Most people are intelligent enough to make up their own mind."

Vincent Cable, Liberal Democrat treasury spokesman, says he is increasingly concerned about the mis-selling, which he has reported to the Office of Fair Trading. "It follows a pattern that we've seen with private pensions and endowments. People in banks are driven by incentives to oversell products very inappropriately to people who don't need them."

The banks disagreed that the sales were inappropriate, and said if there was any fault, it lay in the individual behaviour of staff who would be retrained. Barclays said: "We are concerned about the findings, as they do not appear to follow our standard sales process.

"Our staff are trained to undertake a thorough interview to ensure that the right products are offered and that the customer can afford them."

Halifax said: "We take these accusations very seriously. We will not tolerate mis-selling of any products."

Abbey told Channel 4: "We're sorry if, on this occasion, we could have explained the need for critical illness cover more sensitively with a more appropriate example, but we disagree that cover was irrelevant for a 29-year-old. Critical illness can strike at any age."

Here's what you can do

It took me just a couple of minutes to find a quote for a critical illness policy that was half the price charged by a high street bank.

I posed as a 34-year old non-smoker looking for a critical illness plan which would pay out £100,000 - enough to cover the typical mortgage - on diagnosis of a dread disease. Abbey gave me a quote of £37.98 per month for a 25-year plan where the payout decreases as the mortgage is gradually paid off. That means I would pay £11,394 over the life of the policy.

Halifax offered me £31.30 a month, equal to £9,390 over 25 years. I tried life-assurance-bureau.co.uk, one of the biggest insurance brokers on the net. It gave me a quote for the same cover for £19.69 per month, with the plan managed by Norwich Union.

That means I'd pay just £5,907 over the 25 years - saving around £5,000 on the plans offered by Abbey and Halifax, although the Abbey plan guaranteed that premiums would not rise. Most other critical illness policies have premiums which are reviewed every five years.

Managing director of life-assurance-bureau, Simon Challiner, said: "We can do this because we sacrifice 75 per cent of the commission. We reckon we beat everybody else on price and we're arranging hundreds of policies every week." Another broker I contacted, Life Search, gave me a quote for a policy of £24.01 a month, and promised to price-match the premium at other brokers.

If you have already taken out an expensive critical illness policy with a high street provider, there is nothing to stop you cancelling it and buying much cheaper cover from a broker. No-one is required to have critical illness as a condition of the mortgage, and in some cases a person's employee benefits package at work may be more than sufficient.

The premium you are quoted depends on your age and whether you have any pre-existing medical conditions. If you are over 40, or seeking cover above £250,000 or suffer from any conditions then a GP report is likely to be required.

Buyers should decide whether they may be better suited to an 'income protection policy' (sometimes called permanent health insurance) rather than critical illness.

Income protection pays a regular income designed to protect your standard of living if you suffer long-term sickness or injury. Benefit usually starts after a waiting period of four, 13, 26 or 52 weeks and is payable until you return to work, die or the policy term expires, whichever happens first. Life Search gave me a quote of £13.80 a month for an income of £700 per month - enough to keep paying off a £100,000 mortgage, and a lot cheaper than critical illness.

life-assurance-bureau.co.uk (01625 416280), lifesearch.co.uk (0800 316 3166)