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Critical illness cover

What does it cover and is it worth it?

Rosie Bannister
Rosie Bannister and Tony Forchione
Updated 3 May 2024

Critical illness cover is designed to pay out a lump sum if you get a serious illness or injury and can't work. But it's not always easy to know what critical illness covers. This guide explains what to look out for, how to decide if it's right for you and how to buy it.

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What is critical illness cover?

In a nutshell, critical illness cover pays out a lump sum if you're diagnosed with one of the 'critical illnesses' it covers. Most will typically cover life-threatening conditions such as a heart attack, stroke and cancer. 

Many critical illness policies are tied in with life insurance, although you can also get standalone cover – so you decide how much cover you want, and how long the policy will last.

How does critical illness cover work?

You'll usually need to choose how much you'd want the policy to pay out, and how long you'd like the cover to last. For example, you could choose to only keep cover until your mortgage is paid off, or leave it running until the upper age limit when the cover automatically ends – which is typically around age 75. 

The insurer will usually ask you to complete a health questionnaire during the application process and may ask to review your medical records, so it's important to declare all pre-existing health conditions when you apply.

It will then consider all your details to determine the monthly premium you'd need to pay – the riskier you appear (for example, you have an active or stressful job and/or a family history of serious illness), the higher the cost.

Once the policy is active, you can then make one claim if you're diagnosed with a specific illness that it lists – though it won't pay out if you die (that's what life insurance is for). Once you receive the lump-sum payment (which is tax-free), you can use the money for anything you like, whether it’s to pay off the mortgage, cover lost income, day-to-day expenses or health-related costs. 

Most policies only pay out once, so if you do have to claim then the policy will end. This extends to joint policies too – so while two people can be covered, only one will be able to claim.

What conditions are (and aren't) covered?

Many believe a critical illness policy will pay out if you get ANY serious illness and can't work, but this isn't true. The definition of 'critical illness' can be a minefield and varies between insurers. Some illnesses might not be covered at all and, even if your policy does include, say, certain cancers, it may only be specific stages that are covered. It’s important to read the T&Cs carefully before taking out any policy.

Common inclusions on critical illness policies:
  • Certain types and stages of cancer
  • Heart attack
  • Stroke
  • Alzheimer’s disease
  • Parkinson's disease
  • Loss of a limb
  • Deafness
  • Blindness
  • Multiple sclerosis
Common exclusions to watch out for

There are often stipulations where a policy won't pay out at all. This can include the severity of illnesses you need to be diagnosed with – for example, you might have to have permanent symptoms to be allowed to claim on the policy.

The insurer could also withdraw cover for some conditions after you reach a certain age, or if you were aware of symptoms before taking out the policy.

In addition, most policies will also exclude claims where the illness is a result of self-harm, alcohol and/or drug abuse, or from taking part in risky or extreme sports. There are also usually time limits in place too, such as not being able to claim in the first 90 days of the policy or the claim being rejected if you were to die within a month of being diagnosed with a critical illness. 

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Should I get critical illness cover?

Ultimately, you don't need to have critical illness cover, so you'll need to weigh up whether the monthly cost is worth it for you. To help, here are some things to consider:

  • You might already be covered. If you, a spouse, a civil-partner is employed, it's always worth checking if your employer(s) offer critical illness cover. This can sometimes be a no-cost standard benefit (though you might pay tax on it) or an option you can choose to pay for as part of the work benefits scheme, and usually via your pay.

    It’s also worth double checking if you, spouse or civil partner already have a life insurance policy that includes critical illness cover before buying a new policy.

    Be aware, though, that if you were to change jobs or be made redundant, your next employer may not have a scheme to offer the same cover. As you can't transfer this type of employment benefit, you'd need to arrange any future cover yourself. And if you've had any significant health problems in the interim, this could be expensive.

  • If you don't rely on an income from working, you’re less likely to need critical illness cover. Those with a partner or other family member who earns enough to support the household, may decide to save on the premiums by going without. The same might be true if you have enough savings to fall back on.

    There are also state benefits that you may be able to claim, though these tend to be under £160/week – if you qualify. See our Benefits checklist for full details.

  • It’s also worth looking at income protection insurance. This is a separate type of cover that pays you an income if you're unable to work due to illness or disability for a set period (generally a year or two). It will usually pay a proportion of your salary, for example two-thirds, so that essential spending is covered. It generally includes a greater range of illnesses than critical illness cover, but can be more expensive. When it comes to deciding between the two types of insurance, it could be worth speaking to a financial adviser.

How much cover do I need?

If you do decide critical illness cover is for you, you'll need to decide on the lump sum you want to insure. This will largely be determined by your personal circumstances – as well as a monthly payment you can realistically budget for.

A good starting point is to calculate any current monthly outgoings that you'd need to cover, then add a buffer for any additional costs that might crop up relating to a critical illness – for example, travel to and from a treatment centre, medication costs or higher utility bills to run medical equipment.

This should then give you a ballpark figure to work from, which you can then multiply by the number of months you'd ideally like any payments to last to work out a lump sum amount. As an example:

  • Amount needed for monthly outgoings - £2,000

  • Number of months you need it to cover - 120 (10 years)

  • Total amount of critical illness cover needed - £240,000

How to cut the cost of critical illness cover, and get the right policy

There are lots of factors that can affect the cost of cover, including age, family history of illness, whether you're a smoker and your job or hobbies. If you’ve decided that critical illness cover is right for you, a general rule applies:

Never blindly go with a policy offered to you by your bank or direct with an insurer, as this can be the most expensive way.

Instead, get quotes from a number of insurers. To simplify the process, it can be worth using an independent financial adviser or specialist broker to buy it. There are two ways to do this:

Option 1: Get advice from a broker – best if you need help choosing

If you're not sure what kind of policy you need, or you have complicated medical conditions or other circumstances, it's best to get some advice before you buy. Doing this means the advisor will take some commission, so it's not the always the cheapest way to buy – though it should result in the most suitable policy.

To find a critical illness insurance adviser, we have listed some brokers who offer vouchers or cashback when you purchase critical illness cover alongside a life insurance policy. And while you should factor these in to your calculations, you shouldn't be swayed by them. For example, if a broker with a voucher gave you a premium just £1 a month more expensive than the same policy with another provider, over a 25-year term, that'd mean you were paying £300 more for the policy – not worth it for a £100 voucher.

Advised brokers to try (in alphabetical order)



ActiveQuote*		 Up to £130 Amazon voucher. New ActiveQuote* life insurance customers who use this link to request a call back and buy a policy, will receive the voucher after six monthly payments have been made made.

For monthly premiums from £10 to £34.99, you'll be emailed a £60 voucher and if your premium's more than £35, you'll get a £130 voucher.


Howden Life & Health*		 £100 cashback paid when you request advice and buy a policy via this Howden Life & Health* link. The cashback will be paid by Howden Life & Health after you've paid the first six monthly premium payments.
LifeSearch*

Up to £140 Amazon voucher. To get the voucher, answer some initial questions using this LifeSearch* link and you will get a callback.

 

Once you commit to buy a new policy, if your monthly premium is up to £30, the voucher amount will be £60 and if your monthly premium is more than £30, you'll get a £140 voucher after the policy has been in force for 90 days.

To get the voucher, you will be emailed details within 45 days (after the 90 day qualifying period) and must submit your claim details within 12 months of the email.

Option 2: Buy from a discount broker – best if you know what policy you want

If you feel confident that you know what you want, you can go via a specialist discount broker. This is generally the cheapest way to buy critical illness insurance, but it does rely on you knowing what sort of policy you want to buy. 

These brokers listed below are cheapest as they rebate commission they get from the insurer to you as a discount. You may still pay a fee to use these brokers, usually around £25 or so, but you mean you can potentially save £1,000s over the life of a policy compared with buying from a bank or direct from an insurer. 

We'd suggest checking at least two and add in the third if you've time, and remember, if you're not sure what you're doing or if a policy's suitable, it's better to get expert advice before buying.

Important. If you do pick up the phone to speak to any of these companies before you buy, make sure you're clear on whether you're getting 'advice' or ‘guidance’ – ask the person you're speaking with.

If they're advising you, they need to do a full check on your financial and medical circumstances and insurance needs before suggesting policies to you. If they're just giving you information about policies or answering your questions, that's fine, but here you shouldn't be pressured into taking one policy over another.

Struggling to find cover? 

If any of the the listed brokers are unable to provide the cover you are looking for, more options are available by heading to the British Insurance Brokers Association website and use their 'Find insurance' search. Make sure to select ‘Critical illness insurance' when it asks what you'd like to insure.

If you need to complain about your insurance provider

The insurance industry doesn't always have the best reputation for customer service. Plus, while a provider may be good for some, it can be hell for others.

Common problems include claims either not being paid out on time or at all, unfair charges, or exclusions being hidden in small print.

It's always worth trying to call your provider first, but, if not, then you can use free complaints tool Resolver. The tool helps you manage your complaint, and if the company doesn't play ball, it also helps you escalate your complaint to the free Financial Ombudsman Service.

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Critical Illness FAQs

  • Can I get cover for pre-existing conditions?

    It's very unlikely you'd be covered for health problems you knew you had before you took out the insurance. All previous medical complaints or doctors' recommendations (including visits) must be disclosed, even if they seem unrelated. If you don't accurately share your medical history, the insurer will argue that had they known of the prior conditions, they may not have offered cover. The result is usually a rejection on the grounds of "non-disclosure".

    If a policy does cover existing medical conditions, this could make it cost more, and there may also be extra conditions attached to the policy. Your insurer should make this clear to you before you buy it.

  • How many critical illnesses can I claim for?

    This does depend on the insurer, and the type of policy, you choose. Insurers will generally cover between 20 and 60 critical illnesses in their policies, and let you claim once, after which the policy will end.

    The payout amount can also vary as some insurers may make a smaller payment, for example, whichever is the lower of 25% of your total cover or £25,000.

    This usually applies if you get diagnosed with specified less severe illnesses. In these cases, you’d expect to get the payout and the policy to remain active.

  • Can I change the level of cover I have during the policy term?

    Some insurers will let you increase the level of cover you have during the term, for an additional cost. It’s worth checking the terms and conditions when applying so you know if your insurer will let you do this, and if an exclusion period will apply before you get the new level of cover.

  • Can I get critical illness cover for my children?

    Many critical illness policies do include some cover for your children – typically paying out if your child is diagnosed with a critical illness it covers or they spend over a certain amount of time in hospital.

    If you make any claims for your child on your policy, it’ll generally stay active and you would be able to claim again if you were then diagnosed with a critical illness.

    The amount of money you’ll get if your child becomes ill will generally be lower than your total cover, typically a proportion or set value. For example, 25% of the amount you're insured for or a flat £25,000.

  • How does it work when critical illness cover is combined with life insurance?

    Many critical illness policies are taken out in combination with life insurance.

    This can work in a couple of ways, either as ‘combined’ or ‘additional’ cover. They work differently in terms of how they pay out:

    • Combined cover will only pay out once, either if you’re diagnosed with a critical illness or if you die. This means that if you’re unlucky enough to get a critical illness that pays out and then you pass away after that, the policy would only pay out once.

    • Additional cover will pay out both if you’re diagnosed with a critical illness and if you die while the policy is still active. Because it has the potential to pay out more than once, these policies tend to be more expensive than combined cover.
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