Critical illness insurance

No one likes to think about the possibility of being diagnosed with a serious illness, but it's important to consider the potential impact of illness on your finances – especially if there are people who depend on you.

Critical illness cover is usually provided as part of a life insurance policy. It's designed to provide a tax-free lump sum payout if you're diagnosed with certain serious illnesses, which could help you and your family to cope financially if you have to stop working for a while.

What types of critical illness are covered?

Critical illness policies usually cover the four major critical illnesses:

  • Heart attack
  • Stroke
  • Certain types and stages of cancer
  • Serious conditions such as multiple sclerosis (MS)

Most policies will also pay out if you are permanently disabled as a result of injury or illness.

What might not be covered?

Again, this will depend on the individual policy and provider, but the following conditions are generally not covered:

  • Existing health conditions
  • Some cancers
  • Illnesses sustained from high risk activities
  • "Chronic" or long-lasting conditions that prevent you from working

Critical illness insurance also doesn't pay out if you die, so it is usually combined with a life insurance product, which does. You might also want to think about whether you'd be able to get by if you were diagnosed with an illness that isn't covered by a critical illness policy – income protection insurance could provide a lifeline for your family in this case.

How much does critical illness insurance cost?

Insurance premiums are based on risk (the likelihood of you making a claim) so most providers will assess your age, fitness, lifestyle and medical history. As you get older your risk of developing certain conditions increases, so premiums tend to rise with age. You can quickly compare the cost of life insurance with critical illness cover using our quote comparison tool.

Getting advice on critical illness cover

If you are unsure whether a critical illness policy is the right option for you, we can put you in touch with a financial adviser who can guide you through your protection insurance options.

With our real-time life insurance quote tool you can get quotes for life insurance plus critical illness cover, comparing a range of providers.

Last updated: 21 May 2015