Soaring house prices have led to massive growth in the critical illness cover market with policy sales rising 21% on the year, finds an ERC Frankona annual survey.

Nearly a third of the policies were written by IFAs. Bancassurers were responsible for the majority of mortgage critical illness cover.

Catherine Baxter, marketing analyst at ERC Frankona said: "With total mortgage lending in 1999 up by 28%, the close relationship between the two markets is obvious." She added that the rise in critical illness cover is linked to the upturn in the housing market, the prime motivation being for buyers to cover their mortgage in case of sickness.

She said: "There are now three million critical illness policies in force in the UK.

"Even allowing for the odd case where an individual has more than one policy, one in ten working people have now got critical illness cover."

ERC Frankona believes that sales in critical illness cover will remain dependent on the housing market. If the market remains buoyant, it predicts that critical illness cover will continue to rise, however if it falls back it is likely to have an adverse effect on sales.

ABI spokesperson, Vic Rance welcomed the news. He said: "The ABI are pleased people are recognising the benefit of critical illness cover as protection for their mortgage."

Other findings in the survey was the average sum assured of new critical illness policies was £52,000, the average sum assured of existing critical illness policies was £47,636.

The top five insurers account for 36% of total sales and the top ten insurers account for 57% of total sales.