Difference between critical illness and terminal illness benefit?

What’s the difference between critical illness and terminal illness? I’m looking at protecting my family should i become too ill to work so they have enough to get by and pay off any mortgage and bills.

Question asked by Mahesh Gandhi
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Answered by Andrew Jenkinson

What’s the difference between the two types of insurance?

It is easy to get confused between ‘critical’ and ‘terminal’ illness, however it is imperative to understand how to differentiate between them when looking into various policies.

Critical Illness Insurance

‘Critical Illness’ is a policy that pays a lump sum if you were to be diagnosed with one of the listened illnesses covered on the policy and is usually bolted on to a Life Insurance policy which pays out on death.

This sum is usually used to pay for private medical care and to make home adjustments if a critical illness has been suffered, or to pay off the remaining balance of a mortgage.

Terminal Illness Insurance

‘Terminal illness’ is usually included in most Life Insurance policies as standard, and only pays out if you have been diagnosed with an illness where a specialist has given you a life expectancy of less than 12 months.

Given this the difference between terminal illness and critical illness is fundamental as you are far more likely to suffer a critical illness that is not necessarily terminal.

For example, a stroke could leave you incapable of working ever again but this wouldn’t invoke a terminal illness payout unless the consultant thought you would pass away within 12 months.

Furthermore, critical illness plans also cover some serious physical disabilities, such as the loss of limbs or eyesight.

Speak to an expert

Feel free to pop us a call on 01273 646 484 to run through with an adviser if you would like to find out more.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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