The difference between income protection and critical illness cover

You can get financial support if you have an unexpected illness or injury, with no restrictions on what the money is used for, with both income protection and critical illness cover. But the two policies apply to very different situations.

Critical illness cover pays you a single lump sum if you’re diagnosed with, or have surgery for, a specified, potentially life-threatening illness. The main benefit is it could help to take away some of your financial worries when you need to focus on your recovery or having treatment. A cash payout could help towards paying your mortgage, regular bills, medical treatment, or make any necessary home modifications and could give you valuable peace of mind.

Income protection, on the other hand, provides a percentage of your salary as a regular payment if you can’t work through illness or injury, to bridge the gap until you return.

Of the two, income protection offers a broader definition of illness and injury. If you have a bad back or experience depression, for example, you may find these common conditions aren’t covered by critical illness cover. There's typically no cash-in value at any time with either type of policy.

You might think income protection isn’t necessary if your employer offers sick pay. However, it’s important to check how long your employer will support you if you're off work due to illness. Some employers may provide full pay for up to a year, while others might offer six months on full pay followed by a period on half pay, before eventually reducing support to the statutory minimum. On the other hand, some employers may offer less generous sick pay, providing only the legal minimum or limiting support to a shorter period. Currently, Statutory Sick Pay (SSP) is £118.75 per week.

Income protection policies do vary depending on the provider, however they're all designed to help replace some of your earnings if you're unable to work due to illness or injury. This could help towards paying essential bills like your mortgage, rent and other outgoings such as utilities and food, enabling you to focus on your recovery.

Our income protection plan, which is called Living Costs Protection, usually pays out a monthly fixed amount after a deferred period (waiting period) of your choice, which can be 4, 8, 13 or 26 weeks. There is no cash-in value at any time.

You can claim as many times as you need while the policy lasts, each claim is subject to a maximum 12 months payout. You'll need to return to work for at least 16 hours a week for at least six months in a row before you can make another claim.

The cost of an income protection policy will depend on your age, medical history, the type of job you do, how quickly you want the policy to pay out, the percentage of income you want covered and the length of cover.

Critical illness cover is about helping you live life after a serious illness. It pays out a lump sum if you are diagnosed with or undergo surgery for a critical illness covered by the policy definition during the term of the policy, and survive for at least 10 days. That could help you worry less about your finances while you recuperate and get the treatment you need. It's worth noting, there's typically no cash-in value at any time. Also, if your payments stop, the cover will end.

The price of a critical illness policy is based on a few things, including the length of cover, the cover amount, your age, medical history, lifestyle and occupation. Unlike some other insurers, our Critical Illness Plan can be bought on its own or with a life insurance policy, as they’re not combined. This means a successful critical illness claim won’t affect your life insurance.

As of June 2025, over half of our customers paid £20.00 a month or less for our critical illness cover.

Our critical illness cover includes 52 conditions, plus children’s cover at no extra cost. If you're diagnosed with one of the additional specified conditions, we’ll pay up to £25,000 or 25% of your total cover amount - whichever is lower. This won’t affect your ability to make a future critical illness claim.

In 2024 we paid 91.5% of critical illness claims totalling £405 million, this is a combination of critical illness, children's benefit and total permanent disability. We also paid 90.1% of income protection claims, totalling more than £61 million ^{Footnote [1]}. Start exploring your options and see how having a protection policy could make a positive difference for you and your family.