Age and Power
If I am reading your question correctly, there is an entire species of carnivorous whales and the Red Crest is a single member of that species. If that is wrong and the Rest Crested Illhveli is the species, then I would go with Tim B II's answer about mating displays.
So, assuming that you want to know why a single member of a species would have such a distinctive display, I would suggest that it is because that is the oldest and most powerful member of the species that humanity has encountered. Think of it as an extreme example of something like the Silverback Gorilla. All Illhveli slowly come into their red crest with age, but between their long lives and extreme competition for resources few are able to actually live long enough for it to be noticeable.
Sudden Acts of Violence
A predator the size of a whale would obviously be in constant search for its next meal, and the older it gets the more experience it would have in hunting in the most efficient manner possible. Which will most likely be long periods of little to no activity followed by bursts of activity when prey is nearby. Drawing another parallel to real creatures, it would be similar to how crocodiles or alligators behave. Minimize energy expenditure by floating along until prey is nearby, then explode into action to subdue your meal. As long as you get more energy from your prey than you spent finding it, you are good to go.
From a human point of view, this is going to look absolutely terrifying. Ships that run into Red Crest would not know that they were in danger until it was far too late. The only thing they would see is a sudden disturbance in the water, if that, and then the ship being demolished around them and anyone in the water being consumed. At the same time, Red Crest is unlikely to attack more than one ship at a time as long as they are suitably spaced out, since that is not how ambushes work. So you have plenty of opportunities for superstitious sailors to see other ships attacked while being relatively safe themselves. Thus the myth of the Red Crest is formed.
Passing the Torch
The final benefit to the red crest being a feature of age is that it inherently allows the Red Crest to always be a threat. One single animal, no matter how dangerous, is a finite threat. Eventually time will take care of it for you. But if the Red Crest is just the oldest and strongest member of it's species, then there will always be the chance for a younger upstart to challenge that position. Depending on what you want for your story this can be a known phenomenon, a complete mystery, or a shocking discovery. There are benefits to however you want to play it.
Knowing about the Red Crest as a title means any time a challenger shows up your sailing lanes just got twice as dangerous. Not only is there another predator around, but the fighting from these two massive creatures could cause disruptions even if they ignore your ships. If the fighting happens out of sight and people never find out, then there is just a giant immortal muderwhale always lurking out of sight waiting to take its due from unwary sailors. I personally like the discovery story though since it can lead to a really exciting reveal. Just when a sailor thinks that they are a goner and the Red Crest is going to get them, a slightly smaller and less red whale attacks the Red Crest and "saves" the day.