Financial Support After a Serious Diagnosis
Critical illness cover can provide a lump-sum payment if you are diagnosed with a serious medical condition covered by your policy and meet its definition.
The money could help with:
- Mortgage or rent
- Household bills
- Everyday living costs
- Paying debts
- Making changes to your home
- Additional care or support
- Allowing you or your family time away from work
However, critical illness insurance does not cover every illness or every diagnosis.
The conditions covered and the definitions used can vary between policies, so it is important to understand what you are buying.
How Does Critical Illness Cover Work?
You choose an amount of cover and pay a premium.
If you are diagnosed with a condition covered by the policy and meet the insurer’s definition, you can make a claim.
If the claim is accepted, the policy normally pays an agreed lump sum.
You can then generally decide how to use that money.
Unlike income protection, it is not normally designed to provide a continuing monthly replacement income.
What Conditions Are Covered?
This is one of the most important things to check.
Critical illness policies cover specified medical conditions, but the precise list and definitions vary.
Depending on the policy, conditions could include certain:
- Cancers
- Heart attacks
- Strokes
- Neurological conditions
- Organ failures
- Other serious illnesses
But simply being diagnosed with a condition that appears on a policy’s list does not necessarily mean a claim will be paid.
Your diagnosis must normally meet the definition and severity criteria contained in the policy.
That is why comparing the number of conditions listed by two insurers can be misleading.
The Definition Matters
Imagine two policies both say they cover a particular illness.
That does not automatically mean they provide identical protection.
One policy may define when a claim qualifies differently from another.
So when comparing critical illness insurance, do not ask only:
Is this illness listed?
Also ask:
What has to happen for the policy to pay?
The wording behind the cover can be more important than the headline number of conditions advertised.
Critical Illness Cover and Your Mortgage
You do not normally have to buy critical illness cover simply because you have a mortgage.
However, a serious illness could affect your ability to work and make mortgage payments.
A successful critical illness claim could provide a lump sum that you might choose to use to:
- Repay some or all of a mortgage
- Meet household costs
- Reduce other debts
- Adapt your home
- Build a financial buffer while recovering
Whether this type of protection is appropriate depends on your circumstances and the financial resources you already have.
How Is It Different From Life Insurance?
The two products protect against different events.
Life insurance generally provides a payment when the insured person dies during the period covered, subject to the policy terms.
Critical illness cover can provide a payment while you are alive if you are diagnosed with a covered condition and meet the policy definition.
Some policies combine life and critical illness protection, but it is important to understand exactly how the combined cover works.
For example, check whether a successful critical illness claim affects or ends the remaining life cover.
How Is It Different From Income Protection?
This distinction is particularly important.
Critical illness cover normally provides a lump sum following a qualifying diagnosis.
Income protection can provide regular payments if illness or injury prevents you from working and you meet the policy’s definition of incapacity.
They therefore answer different questions.
Critical illness cover asks:
Have I developed a specified condition that meets the policy definition?
Income protection asks:
Am I unable to work as defined by the policy?
Someone could be unable to work without qualifying for a critical illness payment.
Likewise, somebody could potentially meet the definition for a critical illness claim without experiencing the same long-term loss of income.
How Much Cover Might You Need?
There is no single correct amount.
Think about the financial impact a serious illness could have on you and your household.
Consider:
- Outstanding mortgage
- Other debts
- Essential household costs
- Savings
- Employer sick pay
- Your partner’s income
- Existing insurance
- Possible home adaptations
- Additional care or travel costs
- How long your finances might need additional support
This can help you identify the financial gap you are trying to protect.
How Long Should the Cover Last?
Think about why you want the insurance.
If your main concern is protecting your mortgage, you might consider the remaining mortgage term.
If you have financially dependent children, you may want protection during the years when they are most dependent on your income.
Your needs can change over time, so review your protection when your circumstances change.
What Affects the Price?
The premium can depend on factors such as:
- Your age
- Health
- Medical history
- Smoking
- Lifestyle
- Occupation
- Amount of cover
- Length of cover
- The policy and benefits selected
Insurers assess risk differently, so premiums and terms can vary.
Pre-Existing Medical Conditions
Your health and medical history can affect the cover available.
An insurer may ask detailed questions when you apply.
Depending on your circumstances and the insurer, this could affect:
- Whether cover is offered
- The premium
- Policy terms
- Exclusions
Do not assume that a medical condition automatically prevents you obtaining cover, but equally do not assume it will necessarily be covered.
Answer the Application Questions Carefully
Give accurate and complete answers to the questions the insurer asks.
You may be asked about:
- Your health
- Medical history
- Family medical history
- Smoking
- Occupation
- Lifestyle
Read each question carefully.
If you are unsure what information the insurer is asking for, ask for clarification rather than guessing.
Accurate information at application stage can be extremely important if a claim is made later.
Children’s Cover
Some critical illness policies may include or offer protection relating to children.
The amount of cover, qualifying conditions, age limits and other terms can vary significantly.
If children’s cover matters to you, compare what is actually provided rather than assuming it is included because a policy mentions family protection.
Additional and Partial Payments
Some policies may provide smaller or additional payments for certain conditions that do not qualify for the policy’s full critical illness benefit.
Again, this varies between products.
Check:
- Which conditions qualify
- What definition applies
- How much could be paid
- Whether a payment reduces the remaining cover
These details can make superficially similar policies work quite differently.
What Happens After a Successful Claim?
This depends on the policy.
A successful claim may result in the main critical illness benefit being paid and that element of the cover ending.
If the policy combines critical illness and life insurance, the effect on the remaining life cover depends on how that particular policy has been structured.
Do not assume that:
Critical illness payment + later full life insurance payment
will automatically happen.
Check the policy terms carefully.
Check What Protection You Already Have
Before buying additional insurance, look at the financial support already available to you.
This might include:
- Employer sick pay
- Workplace benefits
- Existing critical illness insurance
- Income protection
- Life insurance
- Savings
- Other household income
You may discover that you already have some protection.
Or you may identify a significant gap.
Understanding that gap should come before choosing a policy.
Review Your Cover When Life Changes
Protection that suited you several years ago may no longer reflect your circumstances.
Review it after major changes such as:
- Buying a home
- Increasing your mortgage
- Having children
- Marriage or separation
- Changing employment
- Becoming self-employed
- Significant changes in income
- Paying off major debts
The purpose is not necessarily to buy more insurance.
It is to make sure the protection you have still matches the risks you are trying to cover.
Compare More Than the Premium
Critical illness policies can be difficult to compare because the details matter.
Look at:
Amount of cover
How much could a successful claim pay?
Conditions covered
Which illnesses and medical events are included?
Definitions
What criteria must be met before a claim qualifies?
Partial or additional payments
Are smaller benefits available for certain conditions?
Children’s cover
Is it included, optional or unavailable?
Term
How long does the protection last?
Premiums
What will you pay, and can the premium change?
Exclusions
What is not covered?
Combined policies
If life and critical illness cover are together, what happens to the remaining cover after a claim?
A longer list of conditions does not automatically mean better protection.
If You Need to Make a Claim
Contact the insurer as soon as reasonably possible and follow its claims process.
The insurer may need medical information to establish whether the diagnosis meets the policy definition.
Keep relevant correspondence and provide the information requested.
If you are unhappy with the way an insurer handles a claim, complain to the insurer first.
If the matter remains unresolved, the Financial Ombudsman Service may be able to consider the complaint.
Critical Illness Cover Checklist
Before buying, ask:
Why do I want the cover?
What financial problem am I trying to protect against?
How much money might I need?
Consider the mortgage, debts and household costs.
What protection do I already have?
Check work benefits, savings and existing insurance.
Which conditions are covered?
Do not look only at the number advertised.
What definitions apply?
Understand what must happen before a claim qualifies.
How long does the cover last?
Make sure the term matches the need you are protecting.
What happens after a claim?
Particularly check this with combined life and critical illness policies.
Can I afford the premium?
Protection needs to remain affordable over the period you intend to keep it.
Compare Critical Illness Cover
Critical illness insurance is a good example of why comparing financial products on price alone can be misleading.
Two policies might both advertise:
Critical Illness Cover
but provide different definitions, benefits and conditions.
Compare the protection behind the premium, not simply the monthly price.
Energility’s insurance comparison service is coming soon.
Until then, our guides can help you understand what you are comparing.
The Bottom Line
Critical illness cover is designed to provide financial support following certain serious diagnoses.
But the important word is certain.
It does not cover every illness, and having a named condition does not automatically mean a claim will qualify.
Before buying, understand:
what is covered, how it is defined, how much could be paid and what happens to the policy afterwards.
Then consider how that protection fits alongside your savings, employer benefits, life insurance and income protection.
The goal is not to collect as many insurance policies as possible.
It is to understand your financial risks and protect the ones that matter to you.
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