Perhaps you've got to the item on your admin list marked life insurance. With a little scrolling and clicking around online for more info, you'll soon find it often goes hand in hand with another way to protect yourself and your family, critical illness cover. Here we walk through how the two things are different, and why you might want both. 

What is critical illness cover? 

Critical illness cover is an insurance policy that pays a lump sum if you’re diagnosed with an illness. The way it works is, providing your condition is covered by your policy, you receive a tax-free payout for the amount of cover you bought.

Do you need critical illness cover?

It’s a question  we ask ourselves when  weighing up whether to commit to another monthly outgoing. And the answer really depends on your personal circumstances.

Being ill or injured isn’t something we tend to think about until it happens. Along with the health worries it might bring, it could also put your working life - and your earnings - on hold at the same time.

That's when critical illness cover could step forward to help you keep paying the bills, especially if you don't have savings or work doesn't give you benefits for long-term sick leave. 

Critical illness cover: pros and cons 

Before you decide if it’s worth the extra outlay each month, it can be helpful to jot down the expenses in your life you'd need to cover if you stopped earning. We've noted some of the main ones below, along with the reasons why critical illness cover might not make sense for you.

Benefits of critical illness cover

  • Money for living costs: If you don’t have savings and become seriously ill unexpectedly, your critical illness insurance payout can help towards expenses such as your monthly household bills and childcare costs.
  • Paying outstanding loans: You might be able to take a payment holiday on your mortgage or other loans, but it won’t last forever, and this is where your payout could replace lost earnings.
  • Money to adapt your house: Making changes to your home to make living with your condition easier can be expensive. No one plans for unexpected cost like this and so a critical illness insurance payout can make the difference.
  • Tax free payout: As you don't have to hand over part of it in tax, you'll get the full lump sum...
  • Your children are covered too: Most policies include cover for your children as well. Ours can cover your kids from when they're 30 days old up until their 18th birthday  (or 21st birthday if they're in full-time education), where we’ll pay up to £25,000 or 50% of the cover amount, whichever is lower.

Disadvantages of critical illness cover

  • Your illness might not be covered: While most major conditions are covered, some aren’t and so you need to check and understand  what’s not included to avoid a nasty surprise. 
  • You may also find you won’t be covered for pre-existing conditions – if you’ve been treated for cancer then you might not be covered for the same or all cancers, or you might have to pay higher premiums.
  • It also depends on the severity of the illness, so you’d need to check the full definition in your policy document before making a claim. 
  • Premiums can be expensive. The cost of critical illness cover depends on your age, smoker status and health. The cost of cover increases the older you are when you take out the cover.
  • No cash value at the end of the policy: Critical illness cover will only pay out if you're diagnosed with certain serious illnesses during the lifetime of the policy. If you pass away, then the policy ends and we won't pay out.
  • You may have cover through work: If you already have an employee benefits package through work, you may be entitled to a financial payout if you become seriously ill during your employment.

How much does critical illness cover cost?

It all depends on your age, personal circumstances, and medical history. Over half of our customers pay just £19* or less a month for our critical illness cover.

* Based on figures from September 2022 to September 2023.

Looking for critical illness cover?

Take a look at what’s covered in more detail, and find out how to apply.

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