What is critical illness cover?


Critical illness cover explained

Also known as critical illness insurance cover, this is a long-term policy that will cover you for a number of serious illnesses (as stated within the agreement with your insurance provider). This means that in the unfortunate event that you end up getting one of these illnesses, diseases or injuries, your insurance company will pay out a lump sum that is tax-free to you. This one-off payment is intended to help you cover all the necessary costs (such as rent, debts, mortgages, or alterations needed such as wheelchair access) that you need when experiencing a life-altering situation as a result of a critical illness. It means you can then spend your time focusing on your recovery without having to deal with the unnecessary stress of worrying about bills.

Is critical illness cover the same as life insurance?

It is important to remember that these two types of insurance are not the same. A critical illness cover will not pay out to your beneficiaries in the event that you suddenly die. With some insurance providers, these two policies are sold together, but if you are particularly interested in an insurance policy with a payout like this you need to look at life insurance policies instead.

What does critical illness cover?

There are a number of different illnesses and conditions that are covered under a critical illness policy cover, but always check the terms and condition prior to signing up with an insurer.

The exact cover you end up receiving will be dependent on the type of policy you take out as well as the insurance provider that you go with. Examples of critical illnesses that can be covered by this kind of policy can include:

  • Certain kinds of cancers
  • Conditions such as multiple sclerosis
  • Strokes
  • Kidney or liver failure
  • Coma
  • Dementia
  • Loss of arms or legs
  • Traumatic brain injury
  • Parkinson’s disease
  • Heart attacks

You will find that with the majority of policy they will specify that this illness or conditions will need to have reached a level of severity before you receive a payout. For example, a stroke that ending up with you having severe symptoms that lasted over a period of 24 hours.

Usually, you will find that if you make a claim on this kind of cover, you will receive one lump sum payment and then the policy is terminated. However, with some policies, it can be possible to receive a smaller payment for conditions or disabilities that are less severe in nature, but this needs to be checked with your individual insurer first.

How does critical illness cover actually work?

If you decide to take out a critical illness policy cover, then you will usually have the option of deciding whether to have increasing or decreasing cover. That means that:

  • Increasing cover: the amount you pay and the cover you receive goes up each year, but it also means the policy retains its value against possible inflation. This may be a better option for you if you want to ensure your living standards and salary remain completely covered.
  • Decreasing cover: the value of your cover goes down per month, but you will pay the same amount for the duration of the policy. This could be preferable if you want to make sure loans or debts that need to be covered can be paid each month.

Do I need critical illness cover?

According to the Association of British Insurers ABI (2015) an estimated one million UK workers find themselves suddenly unable to work due to an unexpected illness, condition or injury. This can land many people in financial difficulty, particularly as state benefits may not end up being able to cover the full salary you are used to receiving, which may stop you being able to work completely.

For example, currently, the Employment and Support Allowance varies from £70 to £100 each week, with the exact amount depending on your circumstances and the severity of the disability or illness you have.

As a result, critical illness cover maybe for you if you know that you do not have enough savings in place to support you in the event of getting a serious illness or disability. Or if you know you do not have an employee benefits package.

Who can get critical illness cover?

There is usually a set of eligibility criteria that you need to meet in order to obtain a critical illness insurance policy. Not all insurance providers have the exact same criteria, so you need to check this with the insurer in question that you are interested in.

With most insurance providers, you will need to fit the following eligibility criteria in order to be able to get a critical illness policy:

  • Not have been already diagnosed with a critical illness you are looking for cover for
  • You will need to be under the policy provides specific upper age limit when you make an application. This is usually under the age of 60.
  • Over the age of 18

The exact criteria could differ based on the insurer you opt for.

Can critical illness policies cover two people?

Some insurance providers will give you the option of being able to cover more than one person:

  • Family policy: where you, your partner and dependents you have are all covered by the critical illness cover
  • Joint policy: where you and one other person are covered


Can I get critical illness cover for a hereditary condition?

This will be dependent on the insurance provider you choose. Not all will cover you for the hereditary condition, or if they do, you may find yourself having to pay a higher premium.

How much will critical illness cover cost me?

The monthly payments you make and the cost of them will be dependent on a number of different factors. These include:

  • Your job occupation, as some are considered higher risk than others
  • Your health
  • Your family medical history
  • Your age
  • The amount of cover you want to take out
  • If you smoke or have previously smoked in the past