Critical Illness Cover

Critical illness cover is an insurance policy which pays out if you become seriously ill and are unable to work and therefore earn money to support yourself or your family.

The policy provides a tax-free lump sum, should you make a claim. The amount will depend on the type of policy which has been taken out, and how much you have been paying for premiums.
Critical illness cover works by the policyholder paying a set premium for a specific amount of time. Some plans are flexible and allow the policyholder to increase their payments as they get older to provide more cover. There are also plans available for people who would like to include their partners in the cover, or for those who want their children to benefit from the payout in the event of a claim.

What does it cover?

The illnesses which are covered vary from insurer to insurer. A basic plan could cover people in the event they had a heart attack, if they were diagnosed with cancer or if they had a stroke or needed a major organ transplant.

More complex plans, which will also cost more money, provide cover in the event of less common problems such as motor neurone disease, blindness, falling into a coma or losing a limb. There are also schemes which cover Alzheimer’s disease, diabetes and rheumatoid arthritis. This list is by no means exhaustive – the variety of illnesses covered is huge.

You will be required to pay higher premiums if one of the illnesses included in that insurer’s list runs in your family.

Who is Critical Illness Insurance for?

Critical illness cover is designed to cover food, bills and the mortgage as well as other day-to-day costs. The lump sum could also be used to pay for any renovations to the home, which might be needed if the policyholder becomes disabled and needs easier access. Or they could be used to pay for a carer. So anyone who does not have enough savings to cover themselves in this situation would be advised to take out protection. People taking out a mortgage are very likely to buy a critical illness plan to avoid losing their home if they became ill.

Policies take into account your age, gender, healthy and occupation. Social factors, such as whether you are a smoker, are also considered.

Pitfalls of Critical Illness Insurance

Critical illness policies pay out a lump sum if you become ill. This is obviously very useful in the event of the policyholder not being able to work again. However, the policy closes once the payout has been made so if you become well enough to return to work, you would have to take out a new policy to cover yourself from any future illnesses.

Your insurer will only pay out if you contract one of the illnesses on its list. Obviously you cannot predict what will happen in the future – but it could be worth ensuring your policy is comprehensive.

If you are so ill you cannot make a claim, you might not be able to benefit from your policy. Ensure that your partner or member of your family is aware of the plan and knows how to make a claim.

Where to buy Critical Illness Insurance

Before buying critical illness cover it is worth assessing whether it would suit you. Would a lump sum help pay the mortgage each month better than, say, an income protection scheme which would provide payment on a monthly basis?

Some people also decide to take out critical illness cover alongside a separate life insurance policy, which will provide another payout in the event of their death.

Critical illness cover is widely available, and so it is worth shopping around for the best deal. Many of the cheapest deals are available online as insurers offer discounts to customers who buy on the internet.

Comments Bubble Comments

Newsletter sign up


In addition to the weekly newsletter, which areas of finance would you like to hear from us about:

Tick this box if you would like us to send you promotions from carefully selected third parties.

By signing-up you agree to the terms of use and privacy policy.

sign-up button

Get the latest information on: