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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 a specific medical condition or illness listed in your policy.

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 how the bills will be paid.

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

What is critical illness cover

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

You'll usually receive a lump sum payment to help cover costs of treatment or to help pay the bills if you're not able to work.

  • Critical illness insurance usually doesn't pay out if you pass away – so it's not always suitable if you want to make sure your family are provided for after you've gone. This is where life insurance comes in
  • Life insurance usually only pays out if you pass away. It's designed to help your family maintain their lifestyle after you've gone (eg paying a mortgage 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.

What is a 'terminal benefit'?

Like us, some insurers will provide what's called a 'terminal benefit' as part of their life insurance cover.

This means you can receive your life insurance payout before you pass away if you're diagnosed with a terminal illness that meets our definition and you're not expected to live longer than 12 months.

A terminal benefit is different to critical illness as money is paid out on the basis that you'll pass away. 

While we do offer this as part of our life cover, not all providers will. So make sure you check the terms and conditions before you take out cover.

How does critical illness cover work?

Your cover will be based on how long you want your policy to last (as most policies will end automatically once you make a claim) and how much you can pay each month.

It's a good idea to make sure cover lasts while you still have significant demands on your income, eg paying off a mortgage or children's school fees.

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

  • With increasing cover, the amount of cover and the amount you pay can both go up each year. This means the policy holds its value to protect against inflation
  • With decreasing cover, the value of your cover goes down each month, but what you pay stays exactly the same for the duration

Increasing cover could suit you if you want to make sure your salary and living standards are covered (as the amount you're covered for accounts for inflation).

While decreasing cover could you suit you if you want to cover any debts or loans that you repay monthly.

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)

Remember too that state benefits come in at around £70-£100 per week, depending on your circumstances. If you don't feel this is enough to cover your outgoings, you might want to consider critical illness cover.

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.

  • 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. Increasing cover helps protect your cover against the effects of inflation, offering extra financial security for you and your loved ones
  • If you’re single, you’ll need a policy to make sure your mortgage can be paid off and this is often a requirement of the mortgage application. Decreasing cover helps to pay off debt, like a 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 – with the flexibility to choose how much cover you need for each policy. And making a claim on one policy shouldn't affect the other. 

Which illnesses are covered? 

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

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

We also offer cover for chldren 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 54 specified conditions we cover.

Can you get cover after being diagnosed? 

Most insurers will ask you for details of 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.

Looking for Critical Illness cover?

Visit our Critical Illness cover page to see full details of the insurance we offer.

Contact us

Still need help? Give us a call.

0800 068 5549

Monday to Friday: 8:00 20:00

Saturday: 9:00 17:00

Sunday: 10:00 16:00

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