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Last updated: 06/06/2024 | Estimated Reading Time: 3 minutes

Critical illness cover

Depending on your reasons for wanting to take out private medical insurance in the first place, one alternative you could consider is critical illness cover.

We’ll explain exactly what critical illness cover entails and go over its various benefits and drawbacks when compared to private medical insurance policies in order to help you work out which would be more suited to your needs.

In This Guide:

What is critical illness cover and how does it work?

Available as a standalone product but more often sold alongside life insurance policies, a critical illness plan will pay out a tax-free lump sum of cash in the event that you develop or contract one of a set list of illnesses or conditions.

The idea is that if you become ill to the point that you are no longer able to continue working, then you will be paid out enough money to still be able to get by, keeping up with day to day expenses or loan repayments. For this reason, critical illness cover is often provided, along with life insurance policies, by employers as a part of an employee benefits package.

What kinds of conditions will be covered?

Ultimately, this will depend on the policy provider, but as a general rule, the condition or illness you develop will have to be particularly severe in order to warrant a pay-out. Mild heart attacks, for example, generally won’t be counted as claim worthy.

Each critical illness policy will come with a set list of conditions that you are covered against, and this list will often include more than 60 conditions.

Both critical illness cover and PMI will come with different exclusions and so you should always check the policy small print before you sign up and if you have any further queries, get in touch with the policy providers.

Critical illness cover vs. private medical insurance

The key difference between critical illness cover and private medical insurance is in the purpose of the money involved. If you plan to use the pay-out from your critical illness policy to pay for private health care, then you are probably better off with a PMI plan.

Critical illness cover is more designed to help you continue with your daily life and to cut down your working hours so that you can spend more time at home while you recover from your affliction.

Critical illness cover is relatively complex and so if you are at all unsure about whether or not it would be appropriate for your needs, get in touch with a policy provider or an insurance expert.

The importance of full disclosure

As with any kind of life or health insurance policy, you’ll have to give a detailed account of your state of health when applying. Things like your age or any pre-existing conditions you might have will cause your premiums to be more expensive, but it is absolutely crucial that you do not lie in order to make your policy cheaper.

If you are found out to have lied or to have withheld any appropriate information during the application process, then you will find that any claim you wish to make will be invalidated and in some severe cases you may face penalty action or even prosecution for fraud.

This is the case with both critical illness cover and private medical insurance.