Critical illness cover, explained properly
Critical illness cover is designed to pay out a lump sum if you are diagnosed with one of the critical illnesses named in your policy. We search the whole market, read the small print, and tell you plainly what you would and would not be covered for.
Get my critical illness quotesWhat is critical illness cover?
Critical illness cover is an insurance policy that is designed to pay a one-off, tax-free lump sum if you are diagnosed with one of the specific conditions listed in your policy documents and you survive a set period, usually 14 or 30 days from diagnosis. It is sometimes sold as critical illness insurance, and it is very often bought alongside life insurance rather than instead of it.
The point of the payout is that it arrives while you are still alive and still facing bills. Most people use it for paying off your mortgage, covering household bills during treatment, adapting a home, or simply buying time so that going back to work is a decision rather than a necessity. Unlike income protection insurance, which replaces a slice of your earnings month after month, critical illness cover pays once and the policy then ends.
It is not the same thing as terminal illness cover either. Terminal illness cover is usually built into a life insurance policy and pays early if you are given a limited life expectancy. Critical illness cover pays on diagnosis of a named condition whether or not that illness turns out to be terminal, which is the whole reason it exists.
What does critical illness cover cover?
Every insurer publishes its own list, and the illnesses are covered only where your diagnosis meets our definition, or rather the insurer's definition, word for word. Older policies were often built around a core of around 36 critical illnesses. Modern policies from the stronger insurers now list anywhere from 40 to well over 100 conditions, with many paying a proportion of the cover amount for less severe diagnoses rather than the full sum.
Three conditions account for the overwhelming majority of every critical illness claim paid in the UK: cancer, heart attack and stroke. Conditions such as a heart attack, certain types of cancer, multiple sclerosis, Parkinson's disease, kidney failure and major organ transplant appear on almost every list. Where policies genuinely differ is at the edges, in the severity wording, and in how generously they treat early-stage cancers.
Cancer
Usually the single largest source of claims. Cover for types of cancer varies most between insurers at the early-stage and in-situ end, so the wording matters more here than anywhere else.
Heart and circulatory
Heart attack, coronary artery bypass, heart valve surgery, aortic surgery and stroke. Definitions turn on evidence of damage, not on the label a hospital uses.
Neurological
Multiple sclerosis, Parkinson's, motor neurone disease and dementia. Several insurers now also pay on a defined loss of independent existence.
What is generally not covered: a pre-existing medical condition you disclosed and the insurer excluded, conditions that do not meet the policy's severity definition, most early-stage or in-situ cancers on weaker contracts, and anything diagnosed before the policy started or within the waiting period. Read the terms and conditions, or ask us to read them for you.
Critical illness cover vs life insurance: what is the difference?
This is the question we are asked most often, and the honest answer is that they solve two different problems. Life insurance protects the people you leave behind. Critical illness insurance protects you while you are still here. Plenty of people take out critical illness cover and life cover together as a single life and critical illness insurance policy, which is usually cheaper than two separate insurance policies but pays only once.
You can get critical illness cover without life insurance from most major insurers, and you can add cover to an existing life insurance policy at certain points. Which route is right depends on your mortgage, your savings, your sick-pay arrangements and who depends on your income.
Life insurance
- Pays out when the person dies during the policy term
- Money goes to your family, your estate or a trust
- Typically includes terminal illness cover at no extra cost
- Cheaper, because one claim per policy and only on death
- Common types of life insurance: level, decreasing and whole of life
Critical illness cover
- Critical illness cover pays out a lump sum on diagnosis, while you are alive
- Money is yours to spend however you choose
- Pays only for conditions that meet the policy definition
- More expensive, because claims are far more likely than death in working age
- The policy will end once a full claim is paid
Is critical illness cover worth it?
It depends entirely on what happens to your household if you are unable to work for a year. If you have six months of savings, generous employer sick pay and no mortgage, the case is weak. If you have a mortgage, children and two weeks of statutory sick pay behind you, the case is strong. That is the whole test, and anyone who answers it without asking about your circumstances is guessing.
The common criticism is that claims get declined. The industry's published figures tell a different story: insurers pay the large majority of critical illness claims, and most declines trace back to non-disclosure at application or to a diagnosis that genuinely did not meet the definition. Both are avoidable. Being straight about your medical history when you take out critical illness cover is the single biggest thing you can do to make sure the policy works.
The second criticism is cost. It is a fair one. Critical illness cover is not cheap, and for some households income protection gives better value because it covers many more conditions than critical illness cover does and keeps paying. We will tell you honestly if we think that is you.
Do you have enough money set aside to get through six months without your income? If the answer is no, that is the gap this type of policy is designed to fill. If the answer is yes, spend your premium elsewhere.
How much critical illness cover do I need?
There is no single right answer, but there is a sensible method. Start with the debt you would want gone: the outstanding mortgage is the obvious one. Add the cost of a realistic recovery period, normally one to two years of household bills, plus anything you would need for adaptations, travel to treatment or a partner reducing their hours. That total is the amount of critical illness cover worth quoting for.
Then decide how long you need the cover to last. Most people match the term to the mortgage, so the cover will end when the loan does. Others run it to retirement so that the amount of cover follows their family rather than their lender. Decreasing cover that tracks a repayment mortgage costs noticeably less than level cover of the same starting size.
- Outstanding mortgage balance, and the years left on it
- One to two years of essential household bills
- Any loans, cards or car finance you would want cleared
- Childcare, travel to treatment and home adaptations
- What your employer actually pays, and for how long
How much does critical illness cover cost?
The amount you pay each month is driven by your age, whether you smoke, the cover amount, the term, your health and your family history. Age is the heaviest factor by some distance, and it is why the premium you are quoted at 32 looks nothing like the one you are quoted at 48. On most policies the amount you pay each month stays the same for the whole term, which is called a guaranteed premium; reviewable premiums start lower and can rise.
As a rough, illustrative-only guide, a healthy 35-year-old non-smoker taking £150,000 of decreasing critical illness cover over a 25-year term is often quoted somewhere in the region of £30 to £55 a month, and closer to £20 to £35 if it is combined with life cover on a single policy. These figures are illustrative only, are not a quotation, and your own price will depend on your medical history and the insurer's underwriting.
There are legitimate ways to bring the cost down: combining life and critical illness cover, using decreasing rather than level cover, matching the term to the mortgage rather than over-running it, and choosing a policy whose definitions fit your family history instead of paying for breadth you do not need.
Not sure which policy actually pays out?
That is the bit we are for. We compare the definitions, not just the price, and we will tell you where a cheaper policy is cheaper for a reason.
Call us on 01933 829 444Can you get critical illness cover with a pre-existing medical condition?
Usually yes, but on different terms. Insurers do not generally cover existing medical conditions, so where you already have a diagnosis the likely outcomes are an exclusion for that condition and anything related to it, a higher premium, a postponement while things settle, or occasionally a decline. Very different insurers reach very different conclusions on the same history, which is exactly why applying to one and giving up is a mistake.
You will complete a health questionnaire covering your physical and mental health, and the insurer may write to your GP. Disclose everything, including things you think are trivial. An exclusion you know about is far better than a claim declined years later because something was left off the form.
If your circumstances are complicated, it is often worth asking us to approach insurers on an anonymous pre-underwriting basis first. That lets us find out where you are likely to be eligible for critical illness cover before anything is recorded against your name.
Children's critical illness cover and how to make a claim
Most insurers now include cover for your children automatically, typically paying a smaller fixed sum, often £25,000 or a percentage of your own cover, if a child is diagnosed with a qualifying condition. Some offer enhanced children's critical illness cover as additional cover for a modest extra premium. Ages covered usually run from a few weeks old to the late teens or early twenties if in full-time education. A child's claim does not normally end your policy.
To make a critical illness claim, contact the insurer as soon as the diagnosis is confirmed. They will ask for your policy number, medical evidence from your consultant and, in some cases, a claim form completed with your GP. Most insurers ask you to submit your claim within a set window and require you to survive a defined number of days of diagnosis before the money is released. We help our clients through this at no extra charge, because the point of arranging cover is that someone picks up the phone when it is needed.
Supporting benefits
Many policies now bundle a second-medical-opinion service, remote GP access and counselling. These are not insurance, and they can be withdrawn, but they get used far more than the main benefit.
Keeping it under review
Moving home, a new baby or a new mortgage all change the cover you need. We review protection at every annual review rather than selling once and disappearing.
Critical illness cover FAQs
What are the 36 critical illnesses?
The figure comes from an older market standard where most policies listed around 36 conditions. There is no fixed statutory list today. Modern contracts commonly cover 40 to 100-plus conditions, and two policies quoting the same number can still differ sharply in what they actually pay for, because everything turns on the severity wording.
Does Martin Lewis recommend critical illness cover?
MoneySavingExpert, the site he founded, does not give personal recommendations. Its guides treat critical illness cover as worth considering if you have a mortgage or dependants and little in the way of savings or employer sick pay, while pointing out that life cover is usually the higher priority and that income protection insurance can be better value for some households. That is broadly our view too, and it is a general position rather than a personal recommendation for you.
Can I get critical illness cover and life insurance together?
Yes. A combined life insurance and critical illness policy pays out on whichever happens first, then ends. It costs less than two standalone insurance policies but gives one payout instead of two. Separate policies cost more and can pay twice. Which is right depends on your budget and how much cover you need.
Am I eligible for critical illness cover?
You generally need to be a UK resident, registered with a UK GP and within the insurer's age band, most commonly 18 to a maximum age of around 64 at application, with the cover ceasing by 70 or 75. Beyond that, eligibility comes down to underwriting your medical history, occupation and any hazardous pursuits.
Do you pay tax on a critical illness payout?
For a personal policy that you pay for yourself out of taxed income, the lump sum is normally paid free of income tax and capital gains tax. Inheritance tax can be a consideration in some circumstances and employer-paid arrangements are treated differently. Tax treatment depends on individual circumstances and can change.
What is the difference between critical illness cover and income protection?
Critical illness cover pays one lump sum for a named condition. Income protection pays a monthly replacement income for almost any illness or injury that stops you working, until you recover or the term ends. Income protection covers far more situations; critical illness cover hands you a larger sum up front. Many people with a mortgage hold both.
Can I cancel my policy?
Yes, at any time, and there is normally a 30-day cooling-off period at the start. There is no cash value, so cancelling simply stops the cover. Never cancel an existing policy until the replacement is on risk, because your health may have changed since you first applied.
The information on this page is general information about how critical illness cover works in the UK. It is not a personal recommendation and it is not advice on your own circumstances. Any figures shown are illustrative only. Your own premium and terms will depend on your age, health, occupation and the insurer's underwriting.
Find out what you would actually be covered for
Tell us a little about your situation and we will come back with quotes from across the market, with the definitions explained in plain English. No obligation, no hard sell.
Get my critical illness quotesCall 01933 829 444