What is critical illness cover?
Put simply: it’s an insurance policy that pays out if you’re diagnosed with one of the illnesses or conditions listed in your policy. It pays out a lump sum if you need to make a claim, which can help protect you against the financial impact a serious diagnosis can have – often significantly and unexpectedly.
The most common claims on this kind of policy are for cancers, heart attacks and strokes, but most policies will also cover a range of other serious conditions, like multiple sclerosis, loss of limbs, and major organ transplants.
How does critical illness cover work?
Critical illness cover pays you a tax-free lump sum if you’re diagnosed with one of the conditions listed in your policy. When you buy a policy, you agree to pay a monthly amount (known as the ‘premium’) in return for the lump sum (known as the ‘benefit’), which is paid out if you’re diagnosed.
How much does a critical illness cover policy cost?
Several factors affect the price of cover – to do with the policy itself; others to do with you and your lifestyle:
- Policy factors
The cost depends on how much cover you buy (the ‘benefit amount’); the length of the policy you take out (the ‘term’); what type of cover you go for (whether the amount will always stay the same, go up, or go down over time); whether you add child cover or any other benefits; and how many illnesses the policy covers. - Lifestyle factors
The price is also affected by your age and smoking status, as well as your personal and family health history. These health and lifestyle factors would all be considered during the insurer’s medical underwriting process.
Can you get critical illness cover after being diagnosed?
Yes – you can always apply for cover, regardless of any previous diagnoses. You have to disclose your health history when you apply, then go through the insurer’s medical underwriting process. If you’ve been diagnosed with a critical illness before, or you have a pre-existing condition, this could affect whether or not you're eligible for critical illness cover and how much it'll cost to get covered.
Is critical illness cover worth it?
As with any kind of insurance, you might only decide that your critical illness cover was ‘worth it’ if the worst happens: you end up needing it. But whether or not you’re going to need it can be difficult to predict. None of us can know if, when, or how likely it is that we’ll be diagnosed with something at some point in the future.
If an unfortunate diagnosis came your way, this kind of insurance could make all the difference in how well you’re able to cope financially. Especially as you might be too ill to work; someone else might need time off work to support you; you might face medical expenses; or need to make household alterations.
Critical illness cover gives you a financial buffer that can be used however you need, freeing you up to concentrate on getting better. For lots of people, the peace of mind this provides means that yes: critical illness cover is worth it.
What illnesses does critical illness insurance cover?
Each policy will cover a unique list of illnesses – which is why you should always read the documents carefully to check what is and isn’t covered in yours. As a ballpark, a typical policy might cover:
- Around 40-60 severe illnesses
- Around 30-50 less severe illnesses
- And, in some cases, up to around 10 child-specific illnesses (and potentially children’s cover for a number of the severe and less severe adult conditions too)
And the most common conditions covered are:
- Cancer
- Heart attack
- Stroke
- Organ failure
- Loss of limbs
- Loss of hearing or sight
- Multiple sclerosis
- Alzheimer’s disease
- Parkinson’s disease
It may be the case that you see the same kinds of illnesses or conditions in more than one category, but the severity will be different (e.g. different kinds and/or stages of cancer). For adults, the severity of your condition will determine whether or not you receive the full payout. Similarly, if your policy has them, children’s illnesses will usually only lead to a proportionate payout.
What are the different types of critical illness cover?
There’s two main types: standalone and combined. For both types of policies, you can either buy level, increasing or decreasing cover – which means the payout always stays the same, goes up over time, or goes down. Beyond that, here’s a breakdown of each:
- Standalone cover
This is an individual insurance policy that only covers you for illness (namely: the critical illnesses listed in your policy). - Combined cover
This is a critical illness insurance policy combined with life insurance cover, meaning you’re covered for both illness and death – whichever happens first. Remember: it only pays out the main benefit once, so if you claimed for a core critical illness, you’d no longer be covered in case of death.
Is critical illness cover the same as PPI?
No. PPI (payment protection insurance) is a short-term insurance policy designed to temporarily cover existing loan repayments (usually your mortgage). If you buy PPI, you’re usually covered for a maximum of 12-24 months, and the amount covered is the same as the amount of your loan repayments. Unlike critical illness cover, PPI is not medically underwritten.
What does critical illness insurance not cover?
If you’re buying a critical illness policy – or you need to make a claim on an existing policy – it’s important to know what’s covered and what’s not. There’s a few exclusions to bear in mind:
- Illnesses not listed in your policy – if you’re diagnosed with a serious condition that’s not listed in your policy, you won’t be eligible to make a claim
- Illnesses listed, but not meeting your policy's definition – most insurers will have a threshold for how serious a critical diagnosis needs to be before you’re eligible to claim on it
- Terminal illness – a standalone critical illness policy probably won't cover you for a terminal illness diagnosis (i.e. a doctor saying you only have 12 months or fewer left to live), but you might be covered if you have a combined critical illness and life cover policy
- Death – again, a standalone critical illness policy wouldn’t pay out if you died, but a combined policy would
Who needs critical illness cover?
There are many reasons why someone might choose to protect themselves with critical illness cover. If you have financial commitments, for example, or financial dependents (i.e. people who rely on your income). Or if you’re simply nervous about the financial consequences of a diagnosis, and/or you don’t have any savings you could fall back on if you needed to. In any of these cases, it could be a good idea to buy critical illness cover.
- You have financial commitments
Whether you rent or own your home, most of us have monthly expenses that won't go away if we're diagnosed with a critical illness. Having a financial cushion at this difficult time helps to make sure you don't struggle to make ends meet. - You have financial dependents
If you've got a partner, children, or other family members relying on you financially, critical illness cover helps protect them financially if you get ill. It gives you peace of mind that they're looked after while you recover, especially if you can't work.
Will my children be covered by my critical illness cover?
Lots of critical illness policies do also cover your children, if you have them. This can be included at no extra cost – so your premiums won’t be affected by adding children’s cover. The children’s illnesses covered are either the same as the adult illnesses; or the same as the adult illnesses with some exclusions. Some policies will also cover child-specific illnesses, like Down’s syndrome or cystic fibrosis.
If your child is diagnosed with one of the serious illnesses covered by your policy, you’re usually only eligible to claim a proportion of your benefit amount. Typically, this is between 25% and 50% or £25,000 – whichever amount is lower. Making a claim like this doesn’t affect your main policy, so you’d still be able to claim the full amount for yourself, if you too were diagnosed with a covered illness. That said, there’s usually a limit to the number of additional children’s claims you can make.
Buying life insurance with critical illness cover
Life insurance and critical illness cover are two different kinds of insurance policies, but many insurers offer products that combine the two. This is why it’s fairly common for people to buy critical illness and life cover at the same time.
What is life insurance?
Life insurance is an insurance policy that pays out a lump sum if you die while you're insured. It's designed to support your loved ones financially without you and your income. There are different types of life insurance policy, but the most common one is 'term life insurance' – which can either be 'level' (always pays out the same amount) or 'decreasing' (pays out gradually less over time).
What's the difference between critical illness and life insurance?
Critical illness insurance pays out if you’re diagnosed with a specified critical illness or condition; life insurance pays out if you die. Both pay a lump sum, but because of the nature of the policies: critical illness is paid to you, while life insurance is paid to your partner or family (or whoever you’ve named a beneficiary).
Can I take out critical illness cover separately to life insurance?
Yes, you can take these two kinds of insurance policies out separately. But many insurers offer combined critical illness and life insurance products – and it can work out easier, from a life admin point of view, to have both kinds of risks covered with one product. Combined products can sometimes come with better benefits too.
What's the difference between standalone and combined critical illness?
Standalone critical illness is its own insurance policy that only pays out on critical illness diagnosis. The alternative to this is combined critical illness cover – which combines critical illness cover with life insurance, so it pays out on critical illness diagnosis or death (whichever happens first).
How to find the best critical illness cover
When it comes to critical illness cover, the policy features tend to be the same across the board, regardless of insurer (which can make the policies tricky to compare). This includes the option to add children’s cover to your policy. We’ve laid out these features in the table below (but you can also read our guide to the best UK critical illness insurance companies for more guidance).
| Typical critical illness policy features | What they actually mean |
|---|---|
| Core benefit | The core benefit pays out for the main illnesses or conditions listed in your policy. This benefit pays out the full amount of cover – so, if you had £50,000 worth of cover, that’s how much you’d receive on diagnosis. |
| Additional benefit | An additional benefit pays out for added illnesses or conditions (usually less severe) listed in your policy. This pays out a proportion of your benefit amount – normally 25% or £25,000, whichever is lower. So, if you had £50,000 worth of cover, you’d receive £12,500 for an additional benefit claim.
This benefit doesn’t affect your core benefit; you could still claim the full amount if you were later diagnosed with one of the core critical illnesses in your policy. You can also usually make multiple additional benefit claims (so long as it’s not for the same thing). |
| Child benefit | Critical illness child benefit pays out if your child is diagnosed with one of the children’s illnesses or conditions listed in your policy (which can mirror the adult illnesses or be child-specific). This pays out a proportion of your benefit amount – normally 50% or £25,000, whichever is lower. So, if you had £50,000 worth of cover, you’d receive £25,000 for a child benefit claim.
Again, child benefit doesn’t affect your core benefit; you could still claim the full amount if you were later diagnosed with one of the adult critical illnesses in your policy. And again, you can make multiple child benefit claims, though the rules around this will vary from insurer to insurer. |
Some insurers offer one kind of critical illness policy, while others offer ‘standard’ and ‘upgraded’ versions. The main difference between any of these is in the number of illnesses and conditions covered.
| Standard (adult) | Upgraded (adult) | Standard (child) | Upgraded (child) | |
|---|---|---|---|---|
| Aviva | 39 core benefit illnesses 2 additional benefit illnesses |
55 core benefit illnesses 42 additional benefit illnesses |
38 core benefit illnesses 2 additional benefit illnesses |
44 core benefit illnesses 3 additional benefit illnesses 9 child-specific illnesses |
| LV= | 39 core benefit illnesses
2 additional benefit illnesses |
59 core benefit illnesses
48 additional benefit illnesses |
38 core benefit illnesses
3 additional benefit illnesses |
58 core benefit illnesses
48 additional benefit illnesses 8 child-specific illnesses |
| Legal & General | 47 core benefit illnesses
20 additional benefit illnesses |
45 core benefit illnesses
19 additional benefit illnesses |
||
| Scottish Widows | 47 core benefit illnesses
29 additional benefit illnesses |
46 core benefit illnesses
5 child-specific illnesses |
||
| Zurich | 46 core benefit illnesses
2 additional benefit illnesses |
58 core benefit illnesses
57 additional benefit illnesses |
45 core benefit illnesses
2 additional benefit illnesses |
57 core benefit illnesses
56 additional benefit illnesses 6 child-specific illnesses |
N.b. Data true as of 6 January 2020.
Is 'terminal illness benefit' the same as critical illness insurance?
Some insurers include what’s known as ‘terminal illness benefit’ in their life insurance policies. This means the life insurance would be paid out early if you’re diagnosed with a terminal illness – i.e. a doctor says you only have a certain amount of time left to live. For most insurers, this amount of time is 12 months or fewer. This is not the same as critical illness cover – it’s simply a feature of a life insurance policy.
How to choose the right critical illness cover
Choosing a critical illness policy isn't always easy. The possibility of getting seriously ill is a tough thing to think about anyway, but then there's all the different policies to look into, each covering a different list of illnesses, and the insurance jargon to get your head around. 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
Is it worth having critical illness cover?
Does critical illness cover pay off your mortgage?
Do I need both income protection and critical illness cover?
Does critical illness pay out on death?
Is COVID-19 classed as a critical illness?
How much does critical illness insurance pay out?
