Critical Illness Cover pays out a lump sum if you become critically ill with one of the serious illnesses the policy covers. This one-off tax-free payment can help cover a mortgage, rental payments, care for a loved one, make necessary alternations to your home or simply cover your household bills.

The most common claims are for cancers, heart attacks and strokes, but most policies cover a range of other serious conditions. Critical Illness is being considered by more people as suffering from a critical illness or long-term disability can be just as devastating financially as a premature death.

Should I consider Critical Illness Cover?

None of us can know whether we are going to be diagnosed with something serious during our lifetime. But are you financially prepared if diagnosed with a serious illness? You may struggle to replace your income with state benefits alone. Critical illness cover could make all the difference if you suffer from one of the listed medical conditions and can offer valuable financial support in many ways.

You should consider critical illness cover if:

• You don’t have enough savings to support you and your family if you become seriously ill or disabled
• You don’t have an employee benefits package to cover a longer time off work due to sickness.
• If you cannot live on state benefits such as Employment and Support Allowance. (According to 2021/2022 figures allowances range from £74.70 a week to a maximum of £113.55)

Also consider asking yourself these questions:

• What ongoing financial commitments do you have?
• Could you cut back on your expenses if you couldn’t work?
• Do you have savings you could use?
• Do you have a partner who could support you financially? Do you have extended family that would help? Could you or would you rely on them?
• Or does your partner rely on you?
• Do you have any children or dependents who rely on your income?
• Do you have illness cover through your employer? Is it enough? What if you change jobs and lose that protection?

What Affects the Cost of Critical Illness Cover?

The monthly cost for Critical Illness can vary widely, depending on the policy and your circumstances. When you take out a critical illness policy you can choose how long it will last for and how much cover you want. It’s worth working out how much you and your family would need to live on if you were unable to work. This can then provide the base amount for your policy.

The cost of your premiums will depend on:

Your Personal Details:

This can include your age, whether you smoke, your current health, any past health conditions plus your family health history. If you have any existing or previous health issues that may be seen as a risk, the illness could be excluded from the policy, or you might have to pay a higher premium. Dangerous hobbies or jobs that place you at risk can also affect your monthly premiums. These health and lifestyle factors would all be considered during the insurer’s medical underwriting process.

Buying the right cover:

Critical Illness cover with a longer term can be more expensive than those with a shorter term. The sum amount that you chose can also affect the monthly premium. It is your decision on the amount you can afford and the amount you want to be covered for, but generally the higher the amount and the longer the term, the higher the premiums will be.

Reviewable or Guaranteed Premiums:

The cost will also depend on whether you pay a reviewable or a guaranteed premium. To ensure your monthly premiums stay the same check that your policy has guaranteed premiums. This means they will always stay the same (or go up at a guaranteed rate, in line with inflation), no matter how long your policy term is.

It is worth noting that Critical Illness Cover can work out at a higher monthly premium than life insurance but may be more likely to pay out.

What Medical Conditions Does Critical Illness Cover?

There are multiple insurers to choose from, each covering slightly different conditions with slightly different policy terms which is why you should always read the policy documents carefully. Each insurer will cover around 40-55 severe illnesses and around 30-40 less severe illnesses. Many insurers also cover child-specific illnesses with critical illness cover.

Some of the most common conditions covered by the market-leading providers may be:

• Cancer
• Heart attack
• Stroke
• Organ failure
• Loss of limbs
• Loss of hearing or sight
• Multiple sclerosis
• Alzheimer’s disease
• Parkinson’s disease

It most cases insurers will place conditions into a severity category. Some cancers are not covered by policies and some early-stage cancers are not always considered critical. The severity of a condition may determine whether you receive a full payout – less severe cases of illness may receive a proportionate amount.

It is important to read your documents or seek advice.

What if I Have Suffered from a Serious Health Condition?

It’s important to know that if you are having any ongoing investigations or have received a diagnosis, you may not be able to get cover, or you may have exclusions on your policy. This means that you would not receive a payout if you were to claim on any conditions excluded from your policy. This may include any pre-existing conditions, hereditary illnesses, or temporary illnesses at the time of cover. When considering any family protection ensure that you answer all health and lifestyle questions accurately as failure to do so may mean that you are unable to claim.

The Benefits of Critical Illness and Your Children

Children’s critical illness cover offers a payout if your child develops a critical condition outlined in your cover. This is commonly 25% of your sum amount or up to £25,000 (whichever is the smaller amount). This can vary between insurers. Some insurers automatically include children’s cover in your plan and others provide it as an additional option. They generally cover around 12 illnesses on the children’s cover. Always check the conditions and whether the cover means an additional cost to your monthly premium.

Children’s Critical Illness may also include additional benefits:

• Child Accident Hospitalisation Benefit
• Child Funeral Benefit
• Childcare Benefit
• Family Accommodation Benefit

Critical Illness Cover and Life Insurance

A life insurance policy pays out a lump sum which is typically used for paying off mortgages, any outstanding debts or to provide some financial support for your family after your death. Critical illness is a little different, you can use the money however you want as the lump sum is paid to you.

It is common for many people to buy a standalone critical illness cover alongside life insurance so that you have two separate policies covering either possibility. Combined critical illness cover is also an option, which allows you to be that it pays out on critical illness diagnosis or death (whichever happens first).

Standalone cover

This is an individual insurance policy that only covers you for the critical illnesses listed in your policy.

Combined cover

This is a critical illness insurance policy combined with life insurance. This means that you are covered for both illness and death. This type of policy only pays out the cover amount once, whichever happens first – illness or death.

Critical illness and Terminal Illness Cover

Critical illness is a completely different cover to terminal illness. With a critical illness policy, the insured person gets a one-time lump sum if they are diagnosed with one of the illnesses listed in their policy. Terminal illness allows you to make an early claim on your life insurance policy if you’re diagnosed with a life-threatening illness and your medical consultant expects this to lead to death within 12 months. Terminal Illness is not sold as a standalone policy whereas Critical Illness is.

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