When you buy any insurance product, you’re paying to protect yourself against the risk of something happening to you in the future. In the case of critical illness cover, it’s the risk of being diagnosed with a critical illness or condition – and the financial consequences that can come along with that, often unexpectedly.

As with any insurance, you might only say that your critical illness cover was ‘worth it’ if the worst happens: you end up needing it. But for many people, it's all about the peace of mind. Critical illness cover is worth it if you value peace of mind – and if the risk of not being covered is too great in your circumstances.

None of us can know if, when, or how likely it is that we’ll be diagnosed with a critical illness in the future. But for someone of working age, you’re much more likely to be diagnosed with a critical illness than to die (though the financial consequences of one may be greater than the other). Deciding whether or not to buy critical illness insurance is often a case of weighing up the cost of being covered vs. the risk of not being covered, along with the peace of mind it brings.

What is critical illness cover and what’s it for?

If you’re thinking about buying critical illness cover, it’s best to start by making sure you’re clear about what it is and what it’s for.

So, what is it? Put simply: it's an insurance policy that pays out a tax-free lump sum if you’re diagnosed with one of the illnesses or conditions listed in your policy.

And what’s it for? The idea is to protect yourself against the financial consequences of a diagnosis, making sure you can keep up with the cost of life if you become critically ill. Since it’s paid out as a lump sum, the money can be used however you need – but essentially it’s designed to help you cover the unexpected: whether that’s continuing to pay the rent, mortgage or bills if you can’t work; covering hospital costs; or making alterations to your home that might be needed as a result of your new condition.

What’s the risk if I don’t have critical illness cover?

Besides your health, the main risk if you’re diagnosed with a critical illness is financial. This is because a critical diagnosis usually means needing time off work for most people – and therefore loss of income – or someone else needing time off to support you, which could also impact the household financially. The same applies if your child becomes critically ill. A critical diagnosis could also bring with it unexpected medical bills, or other costs associated with your treatment and/or recovery.

Obviously the risk of not having critical illness cover will be different per person, depending on your circumstances – in particular, what financial commitments you have and whether or not anyone else relies on you financially. What you’re diagnosed with and what the potential impact of that diagnosis is will also play a part.

The question is: if part of your household’s income was missing, or you were faced with unexpected costs as a consequence of your diagnosis, would you be able to keep up with the cost of life? The answer to this will tell you whether or not it’s worth getting covered.

Do I buy critical illness cover on its own or with life insurance?

You can do either, but critical illness is most commonly bought alongside life insurance. Since so many insurers offer combined critical illness and life insurance products, it can work out easier, purely from an admin point of view, to have both risks (i.e. the risk of dying and the risk of becoming critically ill) covered with one policy, with one monthly premium to pay.

Combined products often come with better benefits, too. Though if you do opt for a combined product, it’s worth remembering it’ll only pay out once: if you die or if you become critically ill (whichever happens first). This means if you claim for a critical illness, you'll no longer be insured with life insurance in case you die.

What’s Total Permanent Disability (TPD) benefit – and do I need it?

We usually recommend taking out critical illness policies that come with Total Permanent Disability benefit. This benefit means you’d receive your payout for any physical or mental condition that results in total and permanent disability – i.e. one that leaves you unable to work in your current occupation ever again.

Crucially, Total Permanent Disability covers you for conditions that aren't otherwise listed in your policy. Instead, your claim will be assessed based on your inability to work in your current job. So, if your condition left you totally and permanently unable to perform your ‘own occupation’, you’d be eligible to claim your critical illness payout.

Will my critical illness insurer pay out?

If you’re diagnosed with one of the critical illnesses or conditions listed in your policy, then yes: the policy will pay out, so long as you meet the definition of the illness as defined in the policy. And, if your policy has Total Permanent Disability (TPD) benefit, it would also pay out for any condition that leaves you totally, permanently unable to work in your current occupation.

It’s always important to know what is and isn’t covered in your own policy. Typically, critical illness policies cover 40-60 severe illnesses and 30-50 less severe illnesses; and if your policy has child cover, it’ll usually cover the same severe and less severe illnesses for children, as well as a few child-specific illnesses too. The most common conditions covered are certain types of cancer; heart attacks; strokes; organ failure; loss of limbs; loss of hearing/sight; multiple sclerosis; Alzheimer’s disease; and Parkinson’s disease.

This is also a good time to mention the importance of full disclosure. The most common reason for claims not being paid out is what’s called ‘misrepresentation’, which means not being fully accurate or honest with the information you provide during the application process.

Will critical illness cover pay out more than once?

Critical illness policies only pay out the main benefit (i.e. the full lump sum) once if you’re diagnosed with one of your policy’s severe illnesses. After you’ve claimed that, the policy ends and you’re no longer covered.

However, many policies also cover some less severe illnesses and/or child illnesses too. If you need to claim in either of these instances, a proportion of the lump sum is usually paid out, but your policy keeps going – so you can still claim the full lump sum amount if you’re diagnosed with a severe critical illness in the future (so long as it’s within your policy term).

Is critical illness cover worth it for you?

Deciding whether it's worth taking out critical illness cover in your circumstances can be tricky. The possibility of getting ill is a tough thing to think about anyway, but committing to pay monthly insurance premiums to protect yourself financially is also a big decision. Then there's all the different policies covering different lists of illnesses and a whole heap of insurance jargon. It's a lot!

This is exactly why Anorak exists. We're an independent online broker for critical illness cover, here to help you make the right decisions about buying cover. Our priority is making sure you only take out cover if you really need it – and if you do, you take out the most relevant cover for you (without spending any more than you need to).

You can use Anorak online or speak to one of our advisers over the phone. Either way, you get:

  • Free advice about what cover you need (if any)
  • Your most suitable quotes from the whole market of insurers
  • Peace of mind that you're doing the right thing for you
Let's find out whether critical illness is worth it for you. First, what's your age bracket?
  • Critical illness cover can be extremely worthwhile, especially as people of working age are more likely to suffer from a critical illness or condition than they are to die
  • It helps you cope with the (often significant) financial consequences of a diagnosis, providing peace of mind, especially if you’re a breadwinner
  • It’s paid as a lump sum, giving you the flexibility to use the money however’s needed in your household’s unique circumstances
  • It can make all the difference in how well you’re able to cope with an unfortunate diagnosis by providing a financial cushion
Is it better to take critical illness cover or health insurance?
Critical illness cover and health insurance are two very different types of insurance. Critical illness cover pays out if you’re diagnosed with a serious illness, helping you cope financially as you recover. Health insurance (or ‘private medical insurance’) covers you for medical treatment in specified places, often used to supplement the medical service you can access via the NHS.

It’s up to you which scenario you’d prefer to be insured for, but it’s important to be clear about what each kind of insurance offers you before making your decision.
What are the benefits of critical illness insurance?
Being diagnosed with a serious illness or condition can be life-changing and have a big impact on your finances, especially if you need time off work. The main benefit of critical illness cover is that it alleviates any financial pressure at a time when you least need it. It pays out a lump sum on diagnosis to be used however’s needed in your circumstances.
What qualifies as a critical illness?
Each critical illness policy has a unique list of illnesses and conditions covered. Typically, there’ll be 40-60 severe illnesses and 30-50 less severe illnesses. It’s important to check what these are before choosing a policy, as some might be more relevant for your profile than others.
Do you need both critical illness and income protection?
They both support you in different ways, so if you can afford to have both critical illness and income protection insurance, it could be a good idea. Critical illness cover pays out for the illnesses listed in your policy, but income protection would be there to catch you if any other medical condition left you unable to work.
Does critical illness cover pay off your mortgage?
If you make a valid critical illness claim, the lump sum paid out can be used however you want or need, including to pay off your mortgage. Whether a critical illness payout would be enough to pay off your mortgage completely depends on how much cover you took out and what your outstanding mortgage balance is.
Does critical illness pay out on death?
Combined critical illness cover (which is critical illness cover combined with life insurance) will pay out if you’re diagnosed with a critical illness or if you die. A standalone critical illness policy only covers you for illness, so wouldn’t pay out if you die while insured.