Sales of critical illness policies rose by 29% between 2001 and 2002, according to the latest report from Datamonitor.
The researcher said that over one million critical illness policies have now been sold, but warned that sales may slow dramatically because insurance companies have increase rates dramatically.
Private medical insurance (PMI) policy sales are growing very slowly, said Datamonitor. It said that between 1997 and 2002 - the period covered by its latest study - the number of people covered by PMI policies has grown by 604,000 to 6.7 million by the end of 2002.
Breaking the PMI figures down, Datamonitor said that group policies are selling well while private policy sales are dwindling. The research found that there were 257,000 fewer people covered by an individual policy in 2002 compared to 1997.
Over the same period, the number of lives covered by group policies increased by 861,000. The average individual premium for a PMI policy rose from £789 to £1,218 by the end of 2002, said Datamonitor. This figure is now more than twice that for a group premium, added the researcher.