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Is Critical Illness Cover the Same as Life Insurance?

Last updated: 16/02/2024 | Estimated Reading Time: 10 minutes

It’s not always easy to speak openly about the chances of becoming seriously ill to the point where you can no longer work, or even the possibility of death. However, when you have loved ones, debts, or a mortgage to consider, sometimes the most positive step you can make is to compare life insurance options or critical illness cover. 

When the unexpected occurs, critical illness cover can help your family cover some important costs. But is this cover the same protection that life insurance policies provide you with? And what happens if you combine both into a joint policy?  

In the guide below, we’ll look into the details of critical illness and life cover, learn about their differences and similarities, and help you to make sure you’ve found the best possible coverage for your specific needs. 

In This Guide:

What is Critical Illness Cover?

Critical illness cover is an insurance policy that protects you if you should become unexpectedly ill and can no longer work to support yourself or your family. With critical illness insurance, you’ll discuss and agree upon the length and term of your policy, in addition to a set list of specific conditions, ailments, and illnesses that the policy will cover you for. 
If you are diagnosed with one of these specific illnesses during the term of your coverage, a lump sum will be paid out to you and your loved ones to help with the unexpected financial burden of this news. The money paid out is completely tax-free, and can be used for medical bills, mortgage payments, and other daily expenditures. 

What am I Covered for with Critical Illness Insurance?

At Money Expert, the specifics of this will depend on each individual’s circumstances and policy, but the generally accepted list of covered conditions as standard will usually include the following: 

•    Most forms of cancer 
•    Crohn’s disease
•    Parkinson’s disease
•    Heart attacks
•    Multiple sclerosis
•    Organ failure
•    Blindness 
No matter where you choose to take out coverage, we’d advise you to read your policy carefully and make note of any exclusions before signing on the dotted line. Critical illness cover will usually include over 60 different ailments and illnesses, but double-checking the small print of any agreement should be a priority. 

Do I Need Critical Illness Insurance?

Critical illness cover may benefit you if you have people who rely on your income (dependants) or a hefty regular bill to keep on top of, like a mortgage payment. People also choose to get this coverage if they would struggle to get a steady income from their employer in the event of a long absence due to illness. 
People without children or other dependants may still find critical illness insurance beneficial, as it can help to cover rent payments and other variables in the event of an unexpected diagnosis that affects your quality of life. 
It’s also essential that you determine whether a standalone critical illness policy works best for you, or if you should have it as an additional part of a life insurance policy.

Are Critical Illness and Life Cover the Same Things?

Although they are not one and the same, critical illness cover has some similarities to life insurance and tends to be sold as an optional add-on to life insurance cover. However, you also have the option to have critical illness and life cover as a combined policy, where a lot of confusion lies about whether or not they’re the same thing.
If you choose to have combined critical illness and life cover, it’s important to understand that the policy will only pay out only once. And as a combined policy, your life insurance won’t be valid should you cash out your critical illness cover, meaning you’ll need to take out a brand new policy. 

The Differences in Critical Illness and Life Cover

In order to provide you with the best life insurance, UK providers like us have an obligation to help you pinpoint the biggest differences between both of these options, as well as the potential benefits of combining them. 
•    How a policy is paid out: Life insurance cover will pay out in a one-off lump sum to your loved ones in the event of your death. Critical illness insurance will make a payment to you after being diagnosed with a medical condition that’s in the defined agreement, while you’re alive. 
•    Things that affect your claim: Critical illness cover protects you in the event of being diagnosed with a wide range of disabilities and illnesses. But each policy is different, so be sure to check what you are and aren’t covered for in your policy documents. Life insurance cover claims may be refused if it’s made in relation to a criminal act, or you’ve failed to divulge an existing medical condition. 
•    Differences in cost: Like any insurance policy, the cost of your premiums for each of these will depend on factors like age, existing health problems, and your overall lifestyle choices. In some cases, many people choose to get critical illness cover alongside a life insurance policy, as it will be more cost-effective in general. However, as stated above, it’s important to remember that most joint policies will only provide a single payout. 

What are the Benefits of Getting a Life Insurance Policy?

When it comes to finding the best life insurance, UK policies are designed to pay out in the event of the policyholder's death. Of course, the payout on these policies will be determined by the pre-agreed terms and conditions of the policy itself. 
With or without critical illness cover, taking out a life insurance policy (or renewing an existing one) can come in many forms, levels of coverage and options. 

Which Life Insurance Policy is Best for my Family?

As we’ve already covered what critical illness cover provides, and how it can work in relation to a life insurance policy, it’s important to know the other kinds of life insurance options you have.

Level Term Policies 
With this life insurance policy, you set out the term length at the beginning of the policy and any payouts will stay the same no matter what part of the term you’re in. This is due to the level term plan only paying out a fixed amount to your loved ones in the event of your death. 
Those agreed policy terms typically range between 10-25 years, but you have the option to discuss this and change it from anywhere between 2-40 years. While it can cost more than other coverage options, level term policies are popular due to the security it provides for your loved ones. 

Decreasing Term Policies 

Like the level term option, this policy defines a set term for the cover. However, with a decreasing term policy, the payout will decrease as the term progresses in relation to the size of the debt remaining. Due to this decrease, these policies tend to cost less than their level term counterparts. 
A decreasing term policy aims to help your loved ones pay off something specific, like a mortgage. For this reason, decreasing term insurance policies are sometimes referred to as mortgage life insurance policies.  

Family Income Benefit Policies

Most standard life insurance policies pay out a single lump sum. But with family income benefits insurance (or FIB), your policy will pay out a regular income to your beneficiaries. The income is completely tax-free, and the amount of income is decided when you take out the policy. 
The payout amounts will last from your death up until the end of your FIB policy terms. In other words, if you choose to give a beneficiary £1,000 a month for 20 years, and pass away after 8 years, they’ll receive £1,000 a month for those remaining 12 years. This is considered a cheaper insurance option compared to many others. 

Over 50s Policies 

When you compare life insurance options, over 50s cover can offer a more specialist kind of protection. As a ‘whole of life’ policy, they give a payout when you pass away, regardless of when that is, unlike term life policies, which have stricter terms for payouts. 
While these policies will usually have higher premiums, you’ll get a ‘guaranteed acceptance’ without the need for a medical examination. For people with pre-existing conditions who are concerned about finding the right cover, this can help to provide help for funeral expenses and other end-of-life costs. 

Joint Life Insurance Policies

A joint policy is more cost-effective than having two single life insurance policies, but it’s important to understand that if one of you passes away and the other person on the policy gets a lump sum payout, that surviving person is no longer covered, and will have to get a new life insurance policy in order to protect any other loved ones. 
While joint policies are usually made between partners, you can also choose to make one with a friend, a family member, or even a business partner. And with a joint life coverage option, any due monies will be paid out to a beneficiary in the event of you both passing away unexpectedly at the same time. 

Should I Get Critical Illness and Life Cover?

Now that we’ve established what critical illness cover is, how it relates to life insurance, and the range of choices available to get the best possible cover, you may be wondering what kind of coverage works best for you.
The answer to this question ultimately depends on how you feel an unexpected illness or your death would affect your loved ones financially. That answer can help you to focus more clearly on whether you should look into critical illness cover, compare life insurance options, or possibly even both. 
Despite the differences between coverages, each can provide peace of mind and protection when the unexpected occurs. And if you’re considering getting both, there are some cost-effective ways of buying this combination, while giving you that added feeling of security, family safety, and satisfaction that no matter what the future holds, the people who matter most to you will be protected. 

Compare Life Insurance Options with Money Expert

While life can be complicated at times, getting the right life insurance quotes shouldn’t. We offer simple, clear, and detailed information regarding life insurance policies. All you need to do is fill out a short form, provide us with some basic information, and we’ll do the rest. Once submitted, an experienced broker from a reputable FCA-regulated firm will contact you and help you decide what’s best for you and your loved ones. 

With us, applying for life insurance quotes takes minutes, and gives you the peace of mind needed to enjoy the rest of your life. 

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easier than ever.