Critical Illness Cover is an insurance policy that will pay out a cash lump sum if you suffer from one of the serious illnesses listed under the policy.
The three most common critical illness claims are for:
As well as the above ‘big three’ conditions, Critical Illness Insurance covers typically anywhere between around 10 to more than 100 serious or critical illnesses. This will depend on your insurer.
Other common conditions covered include:
Each insurer has their own definitions of these illnesses, which effectively sets a ‘threshold’ for how serious that illness has to be before you can make a successful claim.
That means getting both robust definitions of the critical illnesses as well as a policy that covers a large number of conditions is important, so always read the small print!
Independent Protection Expert at Drewberry
If you develop a critical illness, this insurance policy is designed to pay out a lump sum.
You can use it to repay a mortgage, keep up with the bills or adapt your home to suit a new disability – however you use it, the cash can prove a hugely valuable lifeline.
Unfortunately, no one can ever be sure what life has in store for them. A serious illness could strike at any time. Statistics show the risk of many critical illnesses is rising in the UK, even among younger people of working age.
Having seen it first hand, I can’t emphasis enough the power of financial support in helping people get back on their feet. For some people it can quite literally mean the difference between life and death.
CEO of Protection Review and Co-Chairman of the Income Protection Task Force (IPTF)
Not every incidence of one of these illnesses will be covered by Critical Illness Cover. Less severe forms of conditions such as cancer or heart attack may not be included in the wording of your policy, so it’s important to check definitions carefully.
The amount of cover you choose doesn’t need will really depend on your personal circumstances and your budget.
However, here are some broad considerations you may wish to take into account when working out how much insurance you need:
You’ll also have to consider Critical Illness Cover underwriting limits when you’re insuring yourself.
These are thresholds which, once you cross, the insurer will require further medical evidence such as a GP Report, bloods or a full medical before your policy can be accepted.
The cost of Critical Illness Cover will depend on a number of factors, including:
There are a number of options for you to consider to make sure the policy works for you and your needs.
Level term critical illness cover is often used where the policy is to cover an interest-only mortgage, where the capital value of the loan doesn’t diminish over time.
Also, level policies are used to ensure you and your loved ones will always receive the full benefit from the policy, no matter when you develop the critical illness.
Decreasing critical illness insurance is often used to cover a straightforward repayment mortgage, where the mortgage balance falls over time.
As the benefit falls over time even as you age and the risk of you claiming increases, decreasing cover is cheaper than level cover.
Just as you can take out Joint Life Insurance, you can take out Joint Critical Illness Cover. This will cover two people for the risk of serious illnesses under one policy.
It’s usually slightly cheaper than buying two separate individual policies but may not always be the best option in the long run.
Just as with life cover, the policy will only pay out once on the first instance of critical illness, potentially leaving the healthy partner without any cover.
If budget is available it can worth considering taking out two individual policies while you are both young, fit and healthy.
Always check not only the number of critical illnesses covered – the average is around 40 but this can be as few as 10 or extend to over 120 – but also the definitions surrounding those illnesses.
Look for clear, robust definitions of the serious illnesses covered by your insurance plan to enhance your likelihood of being able to claim.
A healthy 25-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:
A healthy 40-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:
A healthy 55-year-old looking for £100,000 worth of cover with guaranteed premiums until the age of 65 could expect to pay:
The price differentiation between insurers with the best proposition and those with a lesser offering may only be a few pounds.
In this instance, you’re paying a few pounds more to potentially increase your chance of making a successful claim, which many people find worthwhile.
Head of Protection Advice at Drewberry
There are a number of factors to consider when you’re looking for the best Critical Illness Cover. An obvious place to start is the insurer’s reputation and how good they are at paying claims.
In 2017, the top UK insurers all paid out on at least 92.3% of critical illness claims they received, a fact which reassures many people.
When searching for the best Critical Illness policy, you’ll also want to check:
Aegon’s Scotland-based UK operations are wholly owned and operated by Dutch insurer Aegon N.V.
Aviva was founded in 1797, but the Aviva brand as it is today was formed in 2000 by the merger of Norwich Union and CGU PLC.
Guardian can trace its history back to 1821 when it was founded as Guardian Fire & Life.
It looks at Critical Illness Insurance differently, offering payouts for any form of malignant cancer with histological confirmation as diagnosed by a UK oncologist, including malignant skin cancer. Guardian also features a simplified claims process for heart attacks that only requires confirmation from a consultant that a heart attack has occurred to pay a heart attack claim, rather than needing extensive medical evidence to assess the severity of the attack.
L&G was formed as an insurance company for lawyers, by lawyers in 1836. It has since grown to become one of the country’s best-known financial services companies.
LV is the UK’s largest friendly society, with more than 5.8 million customers, 1.1 million of whom are members.
Royal London previously operated Scottish Provident and Bright Grey as separated brands providing Critical Illness Insurance under the Royal London umbrella. From 2016, both have been merged into the main Royal London brand.
Founded in 1812, Scottish Widows is today part of Lloyds Banking Group.
Zurich is a Swiss-based global insurance giant, operating in more than 170 countries. It employs around 55,000 employees worldwide, including 4,500 in the UK.
Critical Illness Insurance usually has a ‘survival period‘ written into the policy.
A Critical Illness Cover survival period means you have to survive for a set period of time – often 14 days – after being diagnosed with a critical illness or disability.
Many policies also have a ‘claims notification period’, whereby insurers require you to inform them (or for a member of your family to inform them if you’re unable to) within a set period of time after the onset of a critical illness for the claim to be paid.
One particular insurer has a claims notification period of just 13 weeks, which sounds a lot longer than it is when you’re dealing with the onset of a serious illness, especially if that illness has reduced your capacity to act by yourself.
It’s more common for insurers to request notification ‘as soon as possible’, but it’s always worth checking this as it varies between insurer to insurer.
Where Critical Illness Insurance will pay out a lump sum based on you meeting a specific definition of a serious illness, Income Protection Insurance will pay out a monthly income should you suffer an illness or injury which prevents you from working and earning an income.
Income Protection tends to be seen as the more comprehensive policy and is often more appropriate way of a working adult protecting themselves financially.
A critical illness payout could quite feasibly be eaten up relatively quickly by repaying a mortgage and making any adjustments to a home to accommodate a new disability.
Meanwhile, an Income Protection policy could continue paying you a monthly income to cover your bills right up to your retirement if you are never able to return to work.
Income Protection is often recommended to working adults over Critical Illness Cover as it can be a far more all-encompassing form of protection. It’s designed to kick in if anything medically renders you incapable of doing your job.
Independent Protection Expert at Drewberry
Critical Illness Insurance
Pays a monthly income
Pays out one lump sum
With own occupation cover, policy pays out if anything medically stops you doing your job
Only covers a set number of serious (i.e. critical) illnesses
You can make multiple claims on Income Protection policies
Policy only pays out once and then ends
Benefit is tied to your earnings; you can insure a percentage of your gross income each month
You can insure yourself for an arbitrary lump sum benefit, however much you feel you need
You and your partner must have individual Income Protection policies
Can be taken out jointly with Life Insurance and your partner
When it comes to matters as important as your health and your family’s financial future, it’s no surprise that everyone wants to get it right.
We’ve got all the tools and the know-how to help you find the best Critical Illness Insurance for you and your family so you know you’re covered should the worst happen.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.
If it is all getting a little confusing and you want to talk through your options to make sure you find the most suitable cover please don’t hesitate to get in touch.
Pop us a call on 02084327333 or email email@example.com.
Independent Protection Expert at Drewberry
I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.