Critical Illness Cover7 min read
Critical illness cover vs income protection
How critical illness cover and income protection differ in the UK, what each is designed to solve, and whether you may need one or both.
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1 in 2
People in the UK will develop cancer in their lifetime
7.6m
UK adults living with heart and circulatory diseases
92%
Of critical illness claims paid by UK insurers
What is critical illness cover?
Critical illness cover pays you a tax-free lump sum if you're diagnosed with a serious illness covered by your policy.
This money is yours to use however you need - whether that's paying off your mortgage, covering bills while you recover, funding private treatment, or simply reducing financial stress during a difficult time.
- Pay off your mortgage and stay in your home
- Cover household bills and living expenses during recovery
- Fund private medical treatment or specialist care
- Make adaptations to your home if needed
- Take time off work without financial pressure
- Support your family while you focus on getting better
Conditions Covered
What Does Critical Illness Cover Include?
Most policies cover a wide range of serious conditions. The exact list varies by insurer, but typically includes:
The Big Three
Account for over 80% of all claims
- Cancer (excluding less advanced)
- Heart attack
- Stroke
Neurological Conditions
Brain and nervous system conditions
- Multiple sclerosis
- Parkinson's disease
- Motor neurone disease
- Alzheimer's disease
Organs & Other
Organ failure and other serious conditions
- Kidney failure
- Major organ transplant
- Liver failure
- Permanent blindness/deafness
The number of conditions covered varies by insurer - from around 30 to over 100. Our advisors can help you compare policies to find the right level of cover for your needs.
Making the Decision
Is Critical Illness Cover Worth It?
Consider how a serious illness would affect you financially.
You might need it if...
- You have a mortgage that would still need paying
- You have limited sick pay from your employer
- You don't have substantial savings to fall back on
- You'd want access to private medical treatment
- Your family depends on your income
You might not need it if...
- You have substantial savings that could cover 1-2 years of expenses
- Your employer provides comprehensive sick pay or critical illness benefits
- You don't have a mortgage or other major debts
- You have other investments you could liquidate
Understanding the Difference
Critical Illness vs Life Insurance vs Income Protection
Each type of cover protects you in different ways. Here's how they compare:
Critical Illness
- When it pays:
- Diagnosis of specified illness
- How it pays:
- One-off lump sum
- Who benefits:
- You (while alive)
- Best for:
- Large one-off costs (mortgage, treatment)
Life Insurance
- When it pays:
- On Terminal diagnosis
- How it pays:
- One-off lump sum
- Who benefits:
- Your beneficiaries
- Best for:
- Protecting family after death
Income Protection
- When it pays:
- When you can't work
- How it pays:
- Monthly payments
- Who benefits:
- You (while alive)
- Best for:
- Replacing income during any illness
| Critical Illness | Life Insurance | Income Protection | |
|---|---|---|---|
| When it pays | Diagnosis of specified illness | Terminal diagnosis | When you can't work |
| How it pays | One-off lump sum | One-off lump sum | Monthly payments |
| Who benefits | You (while alive) | Your beneficiaries | You (while alive) |
| Best for | Large one-off costs (mortgage, treatment) | Protecting family after death | Replacing income during any illness |
Many people benefit from a combination of these covers. Our advisors can help you build the right protection package.
How Much Critical Illness Cover Do You Need?
The right amount depends on what you'd need the money for. Most people consider one or more of these scenarios:
- Mortgage payoff - Cover equal to your outstanding mortgage balance
- Income replacement - 2-3 years' salary to cover living costs during recovery
- Private treatment - Additional funds for specialist care or treatment abroad
- Home adaptations - Money to modify your home if your condition requires it
Tip: If you have life insurance and want to add critical illness cover, you can often get a combined policy. This pays out once - either on death or diagnosis of a critical illness, whichever comes first.
Understanding Premiums
What Affects the Cost of Critical Illness Cover?
Your Age
Younger applicants pay less. The risk of critical illness increases significantly with age.
Your Health & Family History
Pre-existing conditions and family history of illness can increase premiums or lead to exclusions.
Smoking Status
Smokers face significantly higher premiums due to increased risk of cancer, heart disease, and stroke.
Cover Amount & Term
Higher cover amounts and longer policy terms mean higher premiums.
Your Occupation
Some occupations with higher health risks may face increased premiums.
Level vs Decreasing Cover
Decreasing cover (where payout reduces over time) is typically cheaper than level cover.
Simple Process
How to Get Critical Illness Cover
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Knowledge Centre
Critical illness guides
Learn how critical illness cover compares with income protection and what each policy is designed to solve.
FAQ
Critical Illness Cover FAQs
Common questions about critical illness insurance in the UK
What is critical illness cover?
Critical illness cover is an insurance policy that pays out a tax-free lump sum if you're diagnosed with a serious illness specified in your policy. Unlike life insurance which pays out when you die, critical illness cover pays out while you're still alive, helping you focus on recovery rather than financial worries.
What illnesses are covered by critical illness insurance?
Most policies cover the 'big three' - cancer, heart attack, and stroke - which account for over 80% of claims. Comprehensive policies also cover conditions like multiple sclerosis, Parkinson's disease, kidney failure, major organ transplant, and many more. The number of conditions covered varies by insurer, ranging from 30 to over 100 illnesses.
Is critical illness cover worth it?
Critical illness cover is worth considering if you'd struggle financially during a serious illness. It can pay off your mortgage, cover bills while you recover, fund private treatment, or adapt your home. With 1 in 2 people developing cancer in their lifetime, and 7.6 million UK adults living with heart disease, the risk is significant.
What's the difference between critical illness cover and life insurance?
Life insurance pays out when you die, providing for your family after you're gone. Critical illness cover pays out when you're diagnosed with a covered condition while you're still alive. Many people choose both - life insurance to protect their family, and critical illness cover to protect themselves during illness.
What's the difference between critical illness cover and income protection?
Critical illness cover pays a one-off lump sum upon diagnosis of a specified serious illness. Income protection pays a regular monthly income if you can't work due to any illness or injury (not just specific conditions). Critical illness is better for large one-off costs; income protection is better for ongoing expenses.
Can I get critical illness cover with a pre-existing condition?
Yes, but pre-existing conditions are typically excluded from cover. For example, if you've had cancer before, future cancer diagnoses may not be covered. Some conditions may increase your premium or lead to exclusions. It's important to disclose all medical history honestly to ensure your policy is valid.
How much critical illness cover do I need?
Consider what you'd need the money for: paying off your mortgage, covering living costs during recovery (typically 1-2 years' salary), funding private treatment, or making home adaptations. Many people choose cover equal to their mortgage balance or 2-3 times their annual salary.
When does critical illness cover pay out?
Critical illness cover pays out when you're diagnosed with a covered condition and meet the policy's definition. Most policies have a 'survival period' (typically 14 days) meaning you must survive that long after diagnosis. The claim is usually paid within a few weeks of approval.
Can I add critical illness cover to my life insurance?
Yes, many insurers offer combined life insurance and critical illness cover. This is often cheaper than two separate policies. However, with a combined policy, it pays out once - either on death OR diagnosis - whichever happens first. Separate policies give you coverage for both events.
What percentage of critical illness claims are paid?
According to the Association of British Insurers, around 92% of critical illness claims are paid. Claims are typically declined due to non-disclosure of medical history, not meeting the policy definition of the illness, or the condition not being covered. Being honest during application protects your claim.
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