What if I became seriously ill?
Critical Illness Cover Explained: A UK Guide
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This guide provides general information only. It is not financial advice or a personal recommendation and does not take account of your individual circumstances.
Quick answer
Critical illness cover pays a one-off lump sum if you are diagnosed with a serious illness listed in the policy, such as some cancers, heart attacks or strokes, and the diagnosis meets the policy's definition. It is different from income protection, which pays a monthly income if you can't work for any covered reason.
Key figures
- paid once on a qualifying diagnosis
- Lump sum
- a common survival period after diagnosis
- 7–14 days
What critical illness cover is
Critical illness cover pays a tax-free lump sum if you are diagnosed with one of the serious conditions listed in your policy during the policy term. You can use the money however you choose, for example to reduce a mortgage, cover bills during treatment, adapt a home or take time off work.
It pays on diagnosis of a listed condition that meets the policy definition, not simply because you are unwell or off work.
What is usually covered
Every policy has its own list, but the core conditions typically include:
- some cancers
- heart attack
- stroke
Many policies list dozens more, such as multiple sclerosis, major organ transplant and some heart surgeries. What matters is not just whether a condition is on the list but how it is defined. Many definitions require a certain level of severity, so a less severe diagnosis may not qualify for a full payment.
How claims usually work
- Diagnosis: the condition is diagnosed by a specialist and meets the policy definition.
- Survival period: many policies require you to survive for a short period after diagnosis, commonly somewhere between 7 and 14 days.
- Payment: the lump sum is paid. With many standalone policies, the cover then ends after a full claim.
Some policies also make partial payments for less severe conditions, and many include some children's cover as standard. Terms differ widely.
Standalone or combined with life insurance
Critical illness cover can be bought on its own or combined with life insurance.
- Combined ("accelerated") cover usually pays once: either on diagnosis of a critical illness or on death, whichever comes first. The policy then ends.
- Standalone or "additional" cover is separate, so a critical illness claim doesn't use up the life cover.
Critical illness cover vs income protection
They are often confused, but they do different jobs:
- Critical illness cover pays a single lump sum, is limited to the conditions listed, and pays on diagnosis.
- Income protection pays a monthly income, can cover most illnesses or injuries that stop you working, and pays after a deferred period for as long as you can't work, up to the policy limits.
A serious back problem or a long period of depression might stop someone working without being a listed critical illness. A cancer diagnosis might qualify for a critical illness payment even if the person keeps working.
What affects the cost
- age, health, family medical history and smoking
- the amount of cover and the term
- the number of conditions covered and how they are defined
- whether it is standalone or combined with life insurance
- whether premiums are guaranteed or reviewable
Limitations to be aware of
- Definitions matter more than the length of the list. A long list with narrow definitions may pay out less often than it appears.
- Pre-existing conditions may be excluded.
- Accurate answers matter. Missing or incorrect health information on the application can lead to a claim being reduced or declined.
A hypothetical example
Morgan has critical illness cover of £75,000. Morgan is diagnosed with a cancer that meets the policy definition and survives the survival period.
- The policy pays £75,000 as a lump sum. Morgan can use it for anything, whether or not they keep working.
- If Morgan had instead been off work for a year with a condition that isn't on the list, this policy wouldn't pay. That is the kind of situation income protection is designed for.
Questions worth considering
- Which conditions does the policy cover, and how are the main ones defined?
- Is it combined with life insurance, and would a claim end the life cover?
- What would a lump sum be used for in my situation?
- How does it fit with any income protection or sick pay I already have?
Frequently asked questions
No. Critical illness cover pays a one-off lump sum on diagnosis of a listed condition. Income protection pays a monthly income if you can't work because of illness or injury.
Not always. Policies define which cancers qualify and at what severity. Less advanced cancers may only qualify for a partial payment, or not at all, depending on the policy.
Many policies require you to survive for a set period after diagnosis, commonly between 7 and 14 days, before the payout is made.