What’s the difference between critical illness and terminal illness?
Explore the key differences between terminal illness and critical illness, and understand how each type of cover works.
The terms ‘critical illness’ and ‘terminal illness’ sound alike and both refer to serious medical conditions, but there are key differences between the two when talking about life insurance.
Understanding how each one works means you can choose the right cover and be better prepared if something serious happens to your health.
If you were diagnosed with a specific illness or significant injury that you’re likely to be living with (and/or recovering from), then this would be considered a critical illness.
For a terminal illness, this means you’re given a terminal diagnosis and either there’s no known cure or your condition has reached a point that it’s incurable. And it’s seen as terminal by a medical team, who expect it to result in death within 12 months.
It's worth noting that this is not a savings or investment product and will only pay out when a successful claim is made. If premiums stop, the cover will end.
What is critical illness insurance?
Critical illness cover is a type of insurance that pays out a lump sum if you’re diagnosed with a critical illness or need surgery for a condition defined in your policy during its term.
To learn more, check out our article What is critical illness cover?
What you’re covered for can vary, but the conditions will be listed in your policy. This way, you’ll know what’s covered and what isn’t during the term of the policy.
Ours pays out if you're diagnosed with one of the 52 named conditions on the product and you survive for 10 days. Some policies, ours included, also cover your children on the same policy for no extra cost.
For a critical illness policy, the most common conditions typically covered are:
- cancer
- multiple sclerosis
- stroke
- heart attack
- brain tumour
- coronary artery bypass grafts
- Parkinson's
It's important you check what conditions are covered, as not all cancers will be, and some conditions need a particular operation or permanent symptoms in order for a successful claim.
Do I need critical illness insurance?
This largely depends on your individual circumstances. If you're unable to work because of a specific condition (like the ones listed above), and this impacts your ability to pay the bills and everyday living costs, a lump sum payout could help ease the financial pressure.
You can use the lump sum payout as you wish, and may consider putting it towards:
- mortgage or rent payments
- paying off loans or debts
- bills and living costs
- adapting your home for living with your condition
- paying for carers
- paying for medical treatment
What is terminal illness cover?
Terminal illness cover pays out while you’re alive if you’re diagnosed with a terminal illness that meets the policy definition. This typically means your condition can't be treated and is expected to lead to death within 12 months. Once a terminal illness claim is paid, the life insurance policy ends.
Unlike critical illness cover, you don’t normally buy terminal illness cover on its own and it’s usually included with a life insurance policy. But, like critical illness cover, it:
- pays out while you’re alive if you’re diagnosed with a terminal illness
- is available if you’ve exhausted all treatment options
- applies if you have less than 12 months left to live.
Think of it like being allowed to make an early claim on your life insurance policy. And, like critical illness cover, you can spend your payout however you choose.
What's the difference between critical illness and terminal illness?
While the illnesses and injuries they cover are often very similar, critical illness insurance can give you a payout for certain serious conditions that you will be living with or recovering from. Terminal illness cover, however, pays out if your condition can’t be treated and is likely to lead to death within 12 months.
Let’s compare:
Critical Illness Insurance
- Can be bought as a standalone policy independent of life insurance
- Will be an extra cost alongside a life insurance policy
- Pays out on diagnosis of a serious condition or injury, covered under the policy T&Cs
- Some policies cover children at no extra cost.
Terminal Illness Cover
- Included with most life insurance policies for no extra cost
- Pays out on diagnosis of a terminal illness that meets the policy definition
- The policy ends once the claim is paid.
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