Compare the best critical illness policies in the UK

22 min Read Published: 14 Apr 2020

Compare the best critical illness policies in the UKIn this article we look at how critical illness insurance works, what it covers, who it can benefit and which providers offer the best policies. We also explain the best way to buy critical illness insurance, including how to get £50 cashback.

What is critical illness cover?

Critical illness cover is an insurance policy that pays out a tax-free lump sum if you are diagnosed with a specific illness or medical condition listed on the policy. The payout can be used to help cover your mortgage or rent, as well as other household bills or debts. Normally the policyholder must survive for between two to four weeks before receiving a payout.

Critical illness cover shouldn’t be confused with life insurance which pays out a lump sum if you die within the term of the policy. However, the two types of policies can be sold together. It should also not be confused with income protection insurance which pays an income if you are unable to work due to illness or an accident. You can find out more in ‘What is the difference between income protection and critical illness insurance?’

For more information about critical illness cover, read our article ‘Critical illness insurance - what is it and is it worth having?’

What conditions are covered by critical illness?

Critical illness policies typically cover seven core conditions - cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis or stroke. Most policies will also pay out if the policyholder becomes permanently disabled due to injury or illness.

Policies can also cover many other conditions, such as Alzheimer’s or bacterial meningitis, but cover can vary between providers so it is important to check the small print carefully before applying. There will also be a number of other conditions that won’t be covered, such as certain types of cancer, and it is unlikely you’ll be covered for medical conditions you had before you made your application.

The Association of British Insurers provides a ‘Guide to minimum standards for critical illness cover’ that contains a list of illnesses critical illness insurance should cover. A policy must include cover for cancer, heart attack and stroke for it to be described as ‘critical illness’ insurance, and the ABI provides a minimum definition for each of these conditions. It also provides minimum definitions for further conditions that may be included in a policy - insurers must follow these definitions or provide more comprehensive cover.

What are the different types of critical illness cover?

There are a number of different policy types to consider when comparing critical illness cover.

These include:

  • Guaranteed policies - as the name suggests, your premium is guaranteed or fixed and will not change during the term of the policy. This can be more expensive in the short-term but you can be safe in the knowledge premiums won’t increase over time.
  • Reviewable policies - monthly premiums are reviewed by the insurer, normally once a year. Although the initial cost is usually lower, the premiums tend to get more expensive over time.
  • Combined cover - with this type of policy, critical illness cover is combined with life insurance which can make it more affordable than having two separate policies. However, you will only receive one payout, so if you make a successful claim for critical illness insurance, you will lose your life insurance benefit.
  • Standalone cover - this is critical illness cover on its own. It can be more expensive than a combined policy, but if you buy it alongside life insurance you can receive a payout for both.
  • Serious illness cover - some insurers, such as Vitality, offer serious illness cover which provides cover for a larger number of conditions than a typical critical illness policy. Payouts are based on how severe the condition is, so you may not receive the full amount you are insured for, however this is offset by the fact that you can claim more than once.

How much does critical illness cover cost?

How much you pay for critical illness cover will depend on a number of factors, such as:

  • Your age
  • Whether you smoke
  • Your health and lifestyle
  • Your family’s medical history
  • Your occupation
  • The amount of cover you choose

 

To give you an idea of how much you could pay, £100,000 of life and critical illness cover for a 30-year old in good health and a non-smoker would be around £25 a month for a period of 20 years. This is likely to increase to around £45 a month for a 40-year old.

Most critical illness policies will only pay out once, so if you make a claim, you won’t be able to make another if you are diagnosed with another illness in the future.

Do I need critical illness cover?

Critical illness cover can be beneficial if you have a family or other dependants who would struggle financially if you were diagnosed with a critical illness or long-term disability and could no longer work.

To calculate how much critical illness cover you need it is worth considering the size of your mortgage, other debts such as loans and credit cards, how much your family would need to cover household bills and childcare costs, as well as potential medical expenses. You should then factor in how much you have in savings and other assets as well as any state benefits you receive. This should give you an idea of how much cover you need, but you can read more in our article ‘How much critical illness cover do you really need?’

Some insurers also offer critical illness cover for children which will pay out if your child becomes ill with a specified condition. Some policies also contribute towards childcare costs and funeral costs.

Be aware that if you are thinking about taking out critical illness cover, it is worth acting now. Due to advances in medical technology and an increase in claims (as more people survive critical illnesses), many insurance firms are reviewing their policies which could result in higher premiums or a reduction in the number of illnesses covered in the future.

Pros and cons of critical illness cover

Pros

There are a number of benefits to critical illness cover. For a start, the tax-free payout that it provides can offer valuable peace of mind for you and your family. It can allow you to take time out to recover and seek treatment without worrying about how the bills will be paid. You can claim for a wide range of conditions and you can often claim for your children, too.

Another benefit is that the money from a critical illness payout can be used in any way you see fit. It could be put towards paying off bills, paying childcare costs, paying for travel expenses to receive treatment or paying for any alterations to your home if you are disabled.

Cons

Critical illness cover can be expensive and not all conditions are covered. This means if you are diagnosed with an illness that is not listed on your policy you won’t get a payout. Understanding the different types of cover can also be confusing so it’s a good idea to speak to an independent specialist.

Top 10 critical illness providers in the UK

The table below compares 10 of the best critical illness providers in the UK

Provider Maximum insured amount Maximum benefit period Number of illnesses covered Survival period Children’s critical illness cover included? Claims history
AIG Unlimited 50 years Over 100 2 weeks Yes 94% (2018)
Aegon £3,000,000 50 years if premiums are reviewable, 40 years if not 51 10 days Yes 94% (2019)
Aviva £3,000,000 50 years 53 10 days Yes 92.6% (2018)
Beagle Street £750,000 40 years 27 30 days Optional extra 99.4% for life insurance (2018)
Legal & General £3,000,000 40 years 39 14 days Yes 92% (2019)
LV= Unlimited 45 years 87 14 days Yes 89% (2018)
Royal London £3,000,000 50 years 67 10 days Optional extra 91% (2018)
Scottish Widows £3,000,000 Up to age 70 40 10 days Yes 98% (2018)
Vitality £3,000,000 n/a 182 (comprehensive Serious Illness policy) n/a Yes 91.2% (2018)
Zurich Unlimited 40 years 42 14 days Optional extra 91% (2018)

Top 10 critical illness policies in the UK - Insurer summary

AIG - Critical illness policy summary

  • AIG is a global insurance company that operates in more than 80 countries and jurisdictions. It provides a range of insurance products and services.
  • Critical illness cover will pay out the full sum assured, or for certain ‘Group II’ conditions it will pay the lower of 50% of the sum assured or £35,000.
  • The maximum benefit term is 50 years, although the policy must end before the policyholder’s 86th birthday.
  • Payment is received if you survive two weeks after being diagnosed.
  • Critical illness cover must be combined with term life assurance.
  • Children’s critical illness cover is included.

Aegon - Critical illness policy summary

  • Aegon started life as Scottish Equitable in 1831 and provides a range of life insurance and pension products.
  • Maximum benefit is £3,000,000.
  • For certain conditions the payout will be the lower of 25% of the sum assured or £25,000.
  • If premiums are reviewable, the maximum benefit term is the shorter of 50 years or the number of years from the benefit start date to the day before the policyholder’s 85th birthday.
  • If premiums are not reviewable, the maximum benefit term is the shorter of 40 years or the number of years from the benefit start date to the day before the policyholder’s 85th birthday.
  • Payment is received if you survive 10 days after being diagnosed.
  • Children’s critical illness cover is included.

Aviva - Critical illness policy summary

  • Aviva has over 15 million customers in the UK and provides a range of insurance products.
  • Maximum benefit is £3,000,000.
  • For certain conditions the payout will be the lower of 25% of the sum assured or £25,000, or the lower of 20% of the sum assured or £20,000.
  • The maximum benefit term is 50 years, although the policy must end before the policyholder’s 76th birthday.
  • Payment is received if you survive 10 days after being diagnosed.
  • Children’s critical illness cover is included.

Beagle Street - Critical illness policy summary

  • Beagle Street is backed by Scottish Friendly Assurance Society and offers life insurance and critical illness cover.
  • Maximum benefit is based on age. Up to the age of 40, it is £750,000 and it then decreases.
  • For certain conditions the payout will be 20% of your cover amount up to a maximum of £20,000.
  • The maximum benefit term is 40 years, although the policy must end before the policyholder’s 80th birthday.
  • Payment is received if you survive 30 days after being diagnosed.
  • Critical illness cover must be combined with life insurance.
  • Children’s critical illness cover can be added.

Legal & General - Critical illness policy summary

  • Legal & General was established in 1836 and provides insurance and investment products.
    Maximum benefit is £3,000,000. For certain conditions the payout will be 25% of your cover amount up to a maximum of £25,000.
  • The maximum benefit term is 40 years, although the policy must end before the policyholder’s 70th birthday.
  • Payment is received if you survive 14 days after being diagnosed.
  • Critical illness cover can be added to a life insurance policy.
  • Children’s critical illness cover is included.

LV= - Critical illness policy summary

  • LV= has 1.28 million customers and offers a variety of products, including life insurance and critical illness cover.
  • Critical illness cover will pay out the full sum assured, or for certain conditions the policy will pay out 50% of your cover amount up to a maximum of £30,000.
  • For 17 conditions it will pay double your cover, up to a maximum of £200,000 (on top of your original cover).
  • The maximum benefit term is 45 years, although the policy must end before the policyholder’s 80th birthday.
  • Payment is received if you survive 14 days after being diagnosed.
  • Critical illness cover can be added to a life insurance policy.
  • Children’s critical illness cover is included.

Royal London - Critical illness policy summary

  • Royal London was founded in 1861 and provides a range of protection policies and pensions.
  • Maximum benefit is £3,000,000.
  • For certain conditions it will pay out 25% of the cover amount, up to £25,000.
  • The maximum benefit term is 50 years, although the policy must end before the policyholder’s 85th birthday.
  • Payment is received if you survive 10 days after being diagnosed.
  • Children’s critical illness cover can be added.

Scottish Widows - Critical illness policy summary

  • Scottish Widows was established in 1815. In 2009 it became part of the Lloyds Banking Group.
  • Maximum benefit is £3,000,000.
  • For certain conditions it will pay out the lower of 25% of the cover amount or £30,000.
  • The policy must end before the policyholder’s 70th birthday.
  • Payment is received if you survive 10 days after being diagnosed.
  • Children’s critical illness cover is included.

Vitality - Serious illness policy summary

  • Vitality is owned by global insurance company, Discovery Holdings. It offers a range of insurance products, as well as Vitality Rewards. See our Vitality review for more information on Vitality Rewards.
  • Vitality’s serious illness insurance offers cover for 182 conditions with its comprehensive policy and 153 with its standard policy.
  • Maximum benefit is £3,000,000. However, the payout could be anywhere between 100% and 5% of your cover amount, depending on the severity of the condition.
  • You can claim more than once.
  • Children’s serious illness cover is included.

Zurich - Critical illness policy summary

  • Zurich is a Swiss insurance company offering a range of savings, investments and insurance products.
  • Critical illness cover will pay out the full sum assured, or for certain conditions it will pay out the lower of 20% of the cover amount or £15,000.
  • The maximum benefit term is 40 years, although the policy must end before the policyholder’s 75th birthday.
  • Payment is received if you survive 14 days after being diagnosed.
  • Critical illness cover must be combined with life insurance.
  • Children’s critical illness cover can be added.

Which is the best critical illness policy in the UK?

Deciding which critical illness insurance policy is best for you will depend on how you define ‘best’. For some people, this may be the cheapest policy, while for others it might be the one that covers the most illnesses or conditions. Alternatively, you might feel the best policy is the one with the best claims statistics. Read our article ‘7 tips to buying the best and cheapest critical illness cover’ for more information on choosing the best cover.

How much you pay for your cover will depend on a range of factors such as your age, whether you smoke, your health and lifestyle, your family’s medical history, your job and the amount of cover you choose. Both those who are employed and those who are self-employed can benefit from critical illness cover as it could provide much-needed financial support if you were diagnosed with a serious illness or long-term disability and could no longer work.

How to get the best critical illness cover

If you are thinking of applying for critical illness cover, it is best to speak to an independent specialist first. An independent specialist will be able to access quotes from all major insurance companies and advise you on the best policy for your circumstances. They can also help you to complete your application forms and provide support should you need to make a claim in the future. Simply click on the link above and fill in the short form to get a quote, with no obligation to take things further. You'll also qualify for £50 cashback if you decide to take out a policy with them.

Alternatives to critical illness cover

There are a few alternatives to critical illness cover as we highlight below:

  • Terminal illness insurance - pays out if the policyholder is diagnosed with an illness that is likely to cause death in the near future - usually six or 12 months. This is different to critical illness insurance which is designed to cover you if you are diagnosed with an illness that you are unlikely to die from.
  • Income protection cover - pays out a monthly benefit if you are unable to work due to an accident or illness. Policies will often pay out until your retirement, death or until you return to work, although short-term policies are also available. Payouts are tax-free but are typically only around 60% or 70% of your salary. You can read more in our article ‘Critical illness vs income protection: Which is best?’
  • Life insurance - pays out a cash lump sum to your dependants if you die within the policy term. They can then use this money to pay for household bills and other costs. You can choose the amount of cover you want and how long you want the term to last.

 

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