What is critical illness cover?

4 min Read Published: 01 Aug 2023

What is critical illness cover?What is critical illness cover?

Critical illness covers you against serious illness and pays out a tax-free lump sum of money if you are diagnosed with serious illnesses such as cancer, heart attacks, strokes and others that are listed within the policy. Critical illness cover is normally used to cover debts such as a mortgage but is also useful to protect your lifestyle against a life-changing illness and the financial impact that this can have. A critical illness claim can pay for debts, and mortgages or simply pay your household bills while you recover.

Critical illness cover was first formed in South Africa by cardiologist Dr Marius Barnard and was called dread disease insurance. Witnessing his cardiac patients' financial suffering led him to convince the insurance market to devise a way to protect against such health events. Today, this type of policy is widely bought alongside life insurance cover to prevent financial hardship caused by illnesses such as cancer, heart attacks, multiple sclerosis and many others.

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What illnesses does critical illness insurance cover?

The illnesses that are covered by critical illness policies vary depending on the insurance provider you choose and some providers offer different tiers of critical illness cover to suit your budget. Critical illness cover will usually include cancer, heart attack and stroke but the list of illnesses can be as long as 150 illnesses in some instances. In order to claim, your illness will need to be listed in the terms of your critical illness cover and meet the definition that is outlined in the small print.

Be careful not to confuse terminal illness cover and critical illness cover - terminal illness cover is usually offered with your life insurance at no extra cost and simply pays the death benefit early if you're given 12 months or less to live.

Long lists of illnesses covered aren't always an indication of a better quality of cover.

It is important to weigh up the cost of critical illness cover with the benefits it provides. Let's say a critical illness policy with the cheapest insurer costs £40 per month and protects you for 50 illnesses and the same policy with a different company costs £60 per month and covers 60 illnesses. You have to judge whether the extra illnesses justify the extra cost. An extra £20 per month could instead be put towards sick pay insurance, for example, which could increase your financial resilience. Cancer, heart attack and stroke make up over 80% of claims against critical illness cover. You can read more about which illnesses are covered in our article,  "What illnesses are covered by critical illness insurance?"

Cost of critical illness insurance

Critical illness insurance costs start at as little as £5 per month - you can usually choose to pay monthly or annually. The cost of your critical illness cover is specific to your personal information and is based on:

  • your age
  • health
  • lifestyle
  • whether you smoke
  • the amount of money your policy will pay out
  • how long you want to be covered

Critical illness cover costs around five times what an equivalent life insurance will cost and can feel like an expensive product. However, this is a reflection of the fact that you are more likely to make a critical illness claim than a death claim when it comes to term life insurance. You can find a range of example quotations for critical illness cover in our article, "How much does critical illness insurance cost?"

Children's critical illness insurance

Children's critical illness claims are one of the top five reasons for claims against critical illness policies. Most good life insurance companies include children's critical illness cover options within an adult's critical illness insurance policy.

Guardian 1821 provides a standalone children's critical illness policy that can be bought with any adult policy but the adult does not have to buy critical illness insurance for their child to be covered.

Critical illness cover for children usually covers a range of child-specific illnesses as well as those that adults are protected for. Illnesses such as Bacterial Meningitis and open heart surgery are among some of the serious illnesses that are covered. To find out more read our article "Can you get critical illness insurance that covers children?"

How to get the best price for critical illness insurance

Comparison sites will give you an indication of cost but often won't differentiate between the quality of the critical illness cover when providing quotes. This requires a deeper understanding of the critical illness products available in the market.

It is wise to work out what your personal circumstances would require in the event of being diagnosed with a serious illness. Some people buy enough critical illness cover to pay off their mortgage as this is forms one of the larger financial concerns for most while others will choose an amount of cover that could provide options to reduce their mortgage balance to a more manageable amount. Once you have established this, you can start to compare prices and products. A specialist critical illness insurance adviser can help with both parts of this.

The adviser will ascertain your personal needs and provide suitable recommendations within your budget. Dealing with an adviser who has access to all the critical illness providers in the market means that they will compare the best price and quality of critical illness cover for you.

If you have a family medical history, you may wish to know that you will be covered in case you are diagnosed with the same medical condition in the future and this can be tricky. Especially when it comes to conditions such as cancer, heart disease, multiple sclerosis and many more, you will find that some insurance companies may exclude the condition on the basis of your family history. However, a specialist adviser will help you to select the insurance company that will offer the most comprehensive cover for any pre-existing health concerns or a condition that has been diagnosed in your immediate family.

Critical illness cover is not complex but there is enough to consider that makes speaking to an adviser useful. Most advisers deal with life insurance and sickness insurance policies too. They usually won't charge for their services as they are paid by the insurance company directly.

We have personally checked and vetted the service provided by a specialist life insurance advisory company. The advisers are trained to provide bespoke personal advice and can look at a combination of all the different types of policies you may need as well as critical illness cover. You can arrange a chat using this form* and if you do decide to take out a policy you will receive £50 cashback.


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