Critical illness cover

Have you considered how you would cope financially if you were diagnosed with a debilitating critical illness? It’s important to have a backup plan in case the unthinkable happens.

That’s what critical illness cover provides; a tax-free lump sum that will help to cover essential costs in the event of a critical illness preventing your return to work and threatening your financial security.

What is critical illness cover?

Critical illness insurance is designed to cover you if you are diagnosed with one of several pre-defined conditions. These conditions usually include cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke, although it is always advisable to check the wording of your policy carefully to ensure that you understand the full extent of your cover.

People often confuse critical illness cover with income protection insurance. Whereas a critical illness cover pays out in one lump sum, income protection insurance pays out in the form of monthly instalments, with the amount received depending on the salary you earned before you were forced to stop working.

If you are unsure whether critical illness cover or income protection insurance is right for you, ActiveQuote’s professional advisors can help by providing free, impartial advice on all types of life insurance.

How does critical illness cover work?

This type of cover is often bought as part of a wider life insurance policy. If you are diagnosed with one of the policy’s predefined conditions, you will receive a tax-free lump sum to cover things such as loss of income, outstanding mortgage payments, therapy costs, private health care and modifications to your home, such as ramps and rails.

When you buy critical illness cover, you will be asked whether you want your cover to be integrated with or independent from your life insurance policy. If you choose an integrated policy, your provider will only pay out once. This means that if you need to claim for critical illness cover, you or your family will not be able to make a life insurance claim on the same policy.

Independent critical illness cover tends to cost more, but does allow you to specify an amount independent of your wider life insurance policy. This means that if you need to claim your critical illness cover, it will still be possible for a life insurance claim to be made following your death.

Typically, critical illness cover comes with a waiting period of around three months, during which you won’t be able to make a claim. This is to prevent against fraud and false claims, although the vast majority of claims are legitimate. According to the Association of British Insurance, 92% of critical illness insurance claims are paid, with the average payout amounting to £67,000 – a reassuringly large sum ensuring adequate cover for anyone affected by a critical illness.

Do I need critical illness cover?

Despite advances in medicine and technology, no one is invulnerable to life-altering critical illnesses such as cancer, heart attacks or organ failure. Unless you have substantial savings or another means of income to meet your monthly outgoings in the event of a serious illness, critical illness cover remains an important and worthwhile investment.

More than a third of the population will be diagnosed with cancer at some point during their lifetime, according to statistics from the National Cancer Institute. While no one likes to think about a critical illness affecting them or their family, critical illness cover can provide peace of mind and financial protection if you develop a life-changing disease.

How much does critical illness cover cost?

The amount your critical illness cover costs will depend on a number of factors, including the amount paid out in the event of a claim, the range of critical illness conditions covered and personal health details, such as whether or not you smoke and whether your family has a history of serious illness.

How do I compare critical illness insurance?

To find the right policy at the right price for your circumstances, you can compare critical illness cover using ActiveQuote’s free online comparison tool. And don’t forget that, as the UK’s leading comparison site for health and protection insurance, our unbiased, specialist advisors are there to provide extra support over the phone should you need it.