Does life insurance cover sickness?

3 min Read Published: 31 Aug 2023

Does life insurance cover sickness?Life insurance is designed to pay out for death and does not cover sickness. Life insurance does however provide a terminal illness benefit and may pay out in the event that you are given a life expectancy of less than 12 months. Terminal illness benefit is effectively an early death payment, rather than a sickness benefit as you cannot claim for death after you have claimed for terminal illness. Sickness cover is available with other types of personal insurance contracts - namely, income protection insurance and critical illness cover.

In this article, we describe what life insurance covers and which types of personal insurance policies provide sickness cover.

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What does life insurance cover?

Life insurance pays out a lump sum of cash if the insured person dies. Critical illness insurance can be added to a life insurance policy for an additional cost meaning you'll be covered for death as well as the diagnosis of a serious illness, whichever happens first. The level of cover that you choose for death need not match the amount of cover for critical illness cover. Income protection insurance, on the other hand, is an individual policy that is normally bought separately from life insurance but compliments overall personal insurance.

What types of sickness insurance can you buy?

If you are looking for insurance that provides financial support in case you were to suffer ill health or be injured, there are four options available to you. Here we describe these sickness insurances and how they work.

Terminal illness insurance explained

In insurance terms, terminal illness is any condition that, in the opinion of a medical consultant, is likely to cause death within 12 months. It is covered by a benefit within most life insurance policies called terminal illness benefit which allows the policyholder to claim the death benefit early if they are deemed to have a life expectancy that is less than 12 months. Almost all life insurance companies except Guardian 1821 use the 12-month life expectancy definition - Guardian 1821 will pay out for particular conditions including stage 4 cancer even if a consultant is unable to confirm life expectancy.

You can read more about terminal illness insurance in our article, "Terminal illness benefit - how it works"

Critical illness insurance

Serious illnesses such as most types of cancer, heart attack, stroke and Multiple Sclerosis are among the illnesses that are covered by critical illness insurance depending on your medical history. Critical illness insurance will pay out a lump sum of money if you are diagnosed with a critical illness that falls into one of the serious illnesses listed within the terms of the cover and the list varies between different critical illness policies. Most cover an average of 50 different illnesses but some critical illness insurance policies can cover up to 182 different illnesses. The diagnosis and severity of the condition must match the terms and conditions of your policy in order for you to claim and you must survive between 5-10 days after the initial diagnosis.

You can read more about critical illness insurance in our article, "Best and cheapest critical illness cover in the UK"

Income protection

Income protection is arguably one of the most comprehensive sickness insurance policies available. If you are sick or injured and become unable to work, income protection insurance will pay you a regular income so that you can continue to pay your mortgage payments, rent, bills and other expenses until you are able to return to work. Sick pay insurance payments are made in addition to many state benefits and usually don't affect these. Income protection differs from other sickness insurances in that it merely requires your doctor to deem you unfit to work or carry out certain daily activities before paying your claim. Sick pay insurance is dependent on your medical history.

You will find more information about income protection in our article, "Income protection - do you really need it?"

Health insurance

Health insurance is a type of personal insurance that could cover the cost of private medical tests, consultations and treatment. Policies vary in terms of what is covered but generally, the insurance pays private medical bills after your chosen level of excess is used up. In addition, some policies pay a cash benefit if you have to stay in a hospital overnight. You can speak to a health insurance specialist* to understand more about this type of insurance and compare quotes to get the best deal.

How to buy sickness insurance

In order to work out which sickness insurance option is best for you, you should speak with a specialist personal insurance adviser*. They have access to the majority of sickness insurance and life insurance policies across the market and will take the time to understand your personal circumstances and concerns before recommending the most appropriate personal insurance for you. The adviser will ask you to prioritise your concerns and allocate a budget for the insurance to ensure that they work within what you wish to spend.

Specialist insurance advisers are also well-trained to consider pre-existing medical conditions to ensure that these are covered wherever possible.

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