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If you become seriously ill to the point where you can no longer work to earn a living, then you might need help to keep up with mortgage and debt repayments as well as general day-to-day living costs.

Critical illness cover can do just that, paying out in the event that you contract a serious illness, helping your family cover the costs that you no longer can.

In This Guide:

What is critical illness cover?

Critical illness cover is an insurance product designed to protect you in case you become seriously ill and cannot work. It's similar to life insurance, and is sold alongside life insurance policies.

It can either be bought as additional cover, which means it's bundled in as an extra on top your life insurance, or as combined cover, which means your life & critical illness policy will just pay out the once. This means if you've got combined cover, and cash out your critical illness policy, your life insurance will no longer be valid and you'll need to take out a new policy.

How does critical illness cover pay out?

When you purchase critical illness cover, both the length of the term of the policy and a list of conditions or illnesses will be set.

Should you contract one of the specified illnesses during the policy term, a tax-free lump sum of money will be paid to you and your family to ease the financial burden you suddenly feel put upon you.

You can then use the money paid out to put towards any debts or mortgage repayments you would normally be able to pay, as well as any medical bills that you may now have to pay.

The money will also help your family on a daily basis pay for the things that you’d normally pay for with your income if you were still able to keep working.

What conditions will be covered by critical illness insurance?

Different providers will offer critical illness cover against different conditions, but generally the list of problems you can contract that warrant a pay-out is rather long, often including over 60 different illnesses.

Conditions typically covered include:

  • Heart attacks
  • Cancers
  • Blindness
  • Crohn's 
  • Parkinson's
  • MS
  • Organ failure
  • and others

You should always make sure you read your policies small print to identify any exclusions before you purchase critical illness cover as you want to be certain that you’re getting the cover you want and need.

Critical illness cover for children

Often, insurance companies will allow you to add critical illness cover for children onto your existing policy at no extra charge, with a pay-out generally limited to up to £25,000. This will allow you to cover any expenses associated with your child becoming seriously ill (like medical bills), reducing financial stress at a time when emotional stress can be particularly high.

You should check with your insurer to see both whether or not such cover is available, and what kind of limit is imposed upon it

How much does critical illness cover cost?

The cost of your premiums will be based on the likelihood of you making a claim, so older customers, customers with existing health problems and customers with potentially dangerous lifestyles (like smokers) will pay more than others, all other things being equal.

Full disclosure is important at this stage – if you are found out to have withheld any relevant information about your health or lifestyle from your insurer you could find your entire policy invalidated and you will not receive a pay-out.

One way to get cheaper critical illness cover is to purchase it along with a conventional life insurance policy. While this will generally keep costs down, you should be aware that often you will only get a single pay-out with such a policy. This means that if you contract a serious illness, you will get your pay-out then, but will not get a further pay-out in the event of your death.

Your critical illness cover will remain active until either the policy term comes to an end, or you can no longer afford to pay for your premiums – so you should make sure that you are going to be able to maintain payments constantly when you open up the policy.

It is important to bear in mind that if either of these things happen without you falling ill, then you will not see any cash return on the premiums you’ve already paid.

Claims data and the probability of paying out

While some insurance companies might charge particularly low premiums, you should check to see if this is related to a particularly low proportion of pay-outs from the provider in question.

All insurance companies are obliged to make this kind of data about their claims publicly available so if it looks like you’re getting a suspiciously good deal, have a look at all of the information you can to make sure everything is at it seems.

In order to make sure you’re getting the best deals available on your critical illness cover you should compare life insurance with Money Expert.

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Last reviewed: 1 October 2022

Next review: 1 November 2022