What is critical illness cover?

A guide to understanding critical illness insurance

Confused about critical illness cover? Here's our guide to understanding critical illness insurance — what it is, how it works and how it differs from life insurance

What is critical illness insurance?

Critical illness cover is a type of insurance that pays out a tax-free lump sum if you're diagnosed with, or undergo surgery for, a critical illness that meets our policy definition during the policy term and survive at least 10 days. We only cover the critical illnesses we define in our policy and no others.

It's designed to help support you and your family financially while you deal with your diagnosis — so you can focus on your recovery without worrying about how the bills will be paid.

What's the difference between critical illness cover and life insurance?

Critical illness cover helps to support you and your loved ones financially if you've been diagnosed with a specific condition.

You'll receive a lump sum payment to help cover the costs of treatment, or to help pay the bills.

Critical illness insurance usually doesn't pay out if you pass away. This is where life insurance comes in.

In most cases, life insurance only pays out if you pass away during the term of the policy. It's designed to help your family to maintain their lifestyle after you've gone, like covering mortgage payments or children's university fees.

Many insurers will offer both types of cover at once, so make sure you understand what each policy offers before you buy. 

Bear in mind that life insurance and critical illness cover policies only pay the full cover amount once, on a valid claim, and end after that. They have no cash value at any time, and if your payments stop, so does your cover.

How does critical illness compare to terminal illness?

The main difference is how ill you are when making a claim. With our critical illness cover, you can make a claim if you’re diagnosed with any of the 52 conditions we cover. And while recovering from and managing any one of these illnesses will likely impact the rest of your life, you don’t need to have a terminal diagnosis to make a claim.

On the other hand, when making a terminal illness claim, your diagnosis needs to meet certain criteria around your life expectancy. Your doctor must confirm that:

  • your illness is incurable,
  • you have less than 12 months to live,
  • they’ve explored all treatment options that could extend your life.

It's worth noting that if you don't meet the criteria to claim under terminal illness, you may still be able to claim under critical illness if you meet the policy definition.

Below we’ll compare a few more key features to see how the benefits stack up.

Critical illness cover Terminal illness benefit
Usually a standalone benefit. You can buy critical illness cover separately to life insurance. Included as standard under our life insurance and also with our critical illness cover. This isn’t the case for all providers, so always check the terms and conditions before taking out any cover.
We’ll pay out if you’re diagnosed with one of the 52 illnesses covered by our critical illness cover and you survive more than 10 days. Pays out if you have an incurable illness covered by the terms of your life insurance. A doctor must diagnose your illness and confirm they expect you have less than 12 months to live. You must also have explored any treatment options that could extend your life expectancy.
You can have both critical illness cover and life insurance, so you could potentially get a pay out from both policies. Plus, you may be able to make multiple critical illness claims under the same policy with our additional and children’s critical illness benefits. You’ll only get one pay out under your life insurance plan. If you’re paid a lump sum for a terminal illness, your life insurance policy will end.

While we offer terminal illness benefits under our life cover and critical illness cover, not all providers will. Always make sure you check the terms and conditions before you take out cover with any provider.

How does critical illness cover work?

Your cover will be based on how long you want your policy to last, and how much you want to pay each month.

You’ll probably want to make sure that you have cover in place for as long as you still have significant demands on your income, such as an outstanding mortgage or children's education fees.

The next thing to consider is whether you want level cover or decreasing cover.

  • With level cover, you choose a lump sum that meets your needs, and how long you want your cover to run for. You’ll then pay the same amount each month until your policy ends. You might choose this option if you want to help cover general outgoings, any additional health-related costs, and other financial commitments.

    You can choose to make your cover amount increase in line with inflation. This means that your monthly payments may rise, but ensures that the lump sum won't be worth less in the future because of the rise in the cost of living. 
  • With decreasing cover, the value of your cover goes down each month, but what you pay stays the same for the duration of the policy. This option could suit you if you want to cover any debts or loans that you repay monthly, such as a repayment mortgage.

Who needs critical illness cover? 

As critical illness cover is designed to support extra costs if you fall ill, you might want to consider it if:

  • You depend heavily on your salary to support yourself and your family
  • You don’t have enough savings to live on if you were to become seriously ill or disabled
  • Your job won’t cover you for a long period off work due to sickness (employee benefits package)

How much cover do you need?

Again, think about the costs you'd need to cover if you were to fall ill and couldn't work (this might include regular outgoings, such as energy bills and food shopping). 

If you have children, you’ll want to ensure that your family is provided for, in case you can’t work due to health problems. Level cover can offer financial security for you and your loved ones.

Or you may need a policy to make sure that your mortgage can be paid off — this is sometimes a requirement of mortgage applications. Decreasing cover could help to pay off debt, like a repayment mortgage, that's reducing over time.

For extra protection, you can usually get critical illness cover and life insurance at the same time. This way, you'll be protected against different circumstances and be able to choose how much cover you need for each policy. 

Which illnesses are covered? 

It’s important to understand that critical illness policies don’t cover all illnesses.

We cover a range of conditions, including all standard conditions set out by the Association of British Insurers (ABI), including Alzheimer's disease, heart attack, stroke, and some types of cancer.

We also offer cover for children at no extra cost, and can provide cover for additional conditions, to give you even more protection.

Take a look at our policy summary for a full list of the conditions we cover.

Can you get cover after being diagnosed? 

Most insurers will ask you for your medical history when you take out critical illness cover.

If you do have a pre-existing condition, make sure you let your insurer know when you apply for your policy.

It doesn't necessarily mean you won't be able to get cover, but as some conditions can make you more likely to suffer from further illness, your insurer could decide not to accept you for critical illness cover or apply an exclusion.

Want critical illness cover?

Take a look at our cover in more detail and find out how to apply.

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