Critical Illness Insurance

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Why Critical Illness Cover?


Insurance to protect you, your loved ones and all the things you work hard for.


Designed to provide a lump sum cash payment on diagnosis of a serious illness to help you financially during difficult times.


Financially protect yourself against 40+ serious illnesses including heart attack, cancer and stroke.

What is it for?

What does Critical Illness Insurance cover?

Depending on the insurer, critical illness policies tend to cover between 35 and 60 critical illness conditions. The definitions of these illnesses and when they would pay a claim vary from insurer to insurer so it is vitally important to read the small print.

Serious Illness

Serious illnesses are the most common causes for claims. The vast majority of claims under these plans are for cancer, heart attack and stroke.


Although less common, policies do cover serious disabilities such as paralysis, blindness and loss of limbs.

What does it cover?

How does Critical Illness Cover work?

Stage 1:
You suffer a critical illness condition during the term of the policy.

Stage 2: 
You make a claim and the insurer then writes to your GP for confirmation.

Stage 3:
Once the claim is accepted, the insurer pays the full sum assured directly to you.

Stage 4:
You can then use those funds to meet your financial obligations.

How does it work?

Do I need Critical Illness?

Although we would all like to think that it won’t happen to us’ the statistics really do speak for themselves.

What are the chances of a critical illness?

With Cancer Research UK stating that over 1 in 3 people will cancer at some point in their life, the chances are unfortunately high and it’s not surprising that cancer is the largest reason for claiming on a critical illness policy.

As around 50% of people diagnosed with cancer manage to live at least another 5 years it is vital to consider how you would survive during this period of recovery.

It’s not just elderly

Cancer Research UK asserts that the risk of getting cancer before the age of 50 years old is 1 in 35 for men and 1 in 20 for women.

Do I need cover?

Your Key Options

1. Choose your level of cover

It is very common to set the level of cover equal to any debt you have outstanding, such as on a mortgage loan, plus an extra amount for lifestyle / family protection.

2. Choose your length of cover

It may be that you set the length of cover to coincide with the end of a mortgage term, retirement or even the age you expect your children to leave home.

3. Level or decreasing cover?

It is possible for the level of cover to remain fixed (level term) or decline (decreasing term) over the life of the policy. Decreasing cover is often used to protect a repayment mortgage.

What are my options?
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What is critical illness cover?

Critical illness insurance pays out a lump-sum amount if you were to suffer any one of the critical illness conditions stated in the policy, so long as that occurs during the term of the policy.

Although some plans cover as few as 35 specific conditions it is possible to gain cover for over 100 conditions with some insurers. For an average critical illness policy covering around 40 conditions, approximately 80% of claims are for cancer, heart attack or stroke.

How does it work?

As critical illness cover pays out a lump-sum amount it is often used to protect a loan, such as a mortgage. The plan can be set-up so the level of cover remains fixed over time to protect an interest only mortgage or set-up so the amount of cover declines over time to protect a principal repayment mortgage.

Another benefit of critical illness insurance paying out a lump-sum is that it can be used to make home modifications, such as installing a stair lift. It can also provide a level of capital to fund monthly outgoings for a period of time whilst recovering.

What are the chances of a critical illness?

Cancer Research UK (2012) state that around 325,000 people are diagnosed with cancer every year and that 1 in 3 of us will develop cancer at some point in our lives. Given this it is not surprising that approximately 60% of all critical illness claims are for cancer.

In addition, the British Heart Foundation (2012) states that around 152,000 people suffer a stroke each year and 103,000 suffer a heart attack.

With advances in medicine a greater proportion of people are surviving these critical illnesses than ever before. For example, the British Heart Foundation (2012) estimates that there about 1.2 million people living in the UK that have had a stroke. It is therefore very important to consider how you would survive financially whilst recovering or if you were never able to return to work.

What is the best critical illness cover?

When looking for the best critical illness insurance there are a number of important factors to consider, which include the number of conditions covered and the payout rate for that policy.

Firstly, it makes sense to find out how many critical illness conditions are covered by the policy, which can range from as few as 35 to over 100. It is also worth seeing how many ‘ABI definitions’ the policy uses. The Association of British Insurers (ABI) has written model critical illness definitions as a best practice, which is optional for insurers to follow.

Secondly, one guide to the quality of the policy and integrity of the insurer may be based on the payout rate for that plan. Some insurers do not publish their payout rates whereas others frequently publish payout rates well above 90% of all claims made.

Our online comparison quote engine not only displays the premium charged by each insurer but also lists the number of conditions covered and the payout rate for that insurer, if available.

Should I combine with life insurance?

Critical illness cover is most commonly taken out as an add-on with life insurance. The combined life insurance with critical illness cover policy would usually payout on the first event of either death or you suffering a critical illness condition.

This type of cover is normally taken out together because the price of a standalone critical illness policy is usually exactly the same as a life policy with critical illness cover. This is due to certain insurer tax advantages available for life insurance and the fact that there is such a high chance of suffering a critical illness before death.

Is Income Protection a better policy?

If you are looking to protect yourself against the financial risk of injury or illness then it is definitely worth considering long-term income protection insurance as an alternative to a critical illness plan.

The main issue with critical illness insurance is that it only covers a specified number of conditions, and they do not relate to your continued ability to earn an income, which is what pays for all the bills at the end of the day.

Sure, if you were to develop cancer there is a good chance you might not be able to work for a lengthy period of time, but what about if you slipped a disk in your back or had to cease working due to depression? In this case an income protection plan would payout whereas a critical illness policy would not.

With ‘own occupation’ income protection the plan would payout for any medical condition that prevents you from working in your current job, which means that you can continue to meet your monthly financial obligations whilst incapacitated.

At Drewberry we are able to offer both plans but tend to recommend income protection for the reasons set-out above. To find out more please read our guide on critical illness cover vs income protection.

What is Serious Illness Cover?

When looking at critical illness cover you may also come across a policy called ‘Serious Illness Cover’ from Vitality. This policy is very similar in the sense that it pays out a lump-sum and runs for a specific term length but there is a very significant difference.

With critical illness cover if you suffer any one of the medical conditions listed in the terms and conditions then the plan will payout 100% of the sum assured (i.e. the level of cover you selected). However, with serious illness cover the amount paid out is based on the severity of the illness and can range from paying out 25% to 100% of your sum assured.

This may sound like a worse proposition but the serious illness policy covers 100 conditions relative to around 40 conditions with other insurers so you are more likely to get a payout with the Vitality policy.

Furthermore, even if both plans cover the same illness the Vitality plan is likely to payout a reduced amount for low severity cases where a critical illness policy would generally only payout for a high severity case. There are very few examples of where a critical illness policy would payout 100% and the serious illness plan would payout less than 100% of your level of cover.

Should I get advice?

Given the number of different policy choices you have available to you in order to cover the risk of illness and injury it makes sense to speak to a professional adviser to run through them.

The adviser can talk you through the differences between critical illness cover, serious illness cover and income protection insurance. After discussing your needs it should become clear which policy choice would be best for you.

If you would like to compare quotes for the different products the adviser can put together various options for you to consider. Feel free to pop us a call on 0208 432 7333 to get started.

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Our Mission at Drewberry™

To provide expert financial advice and deliver a passionate 5-star service to help educate our clients so they can make informed decisions.

To help individuals and businesses throughout the UK to plan their financial future whilst protecting them against the financial risks they may face.

To provide quality financial advice in a transparent, friendly and professional manner.

Frequently Asked Critical Illness Insurance Questions

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