| How it pays | Usually a tax-free lump sum on diagnosis |
|---|---|
| Conditions covered | Defined list; varies by insurer |
| Cover types | Level, decreasing, standalone or with life cover |
| Survival period | Often 10–14 days after diagnosis |
| Children's cover | Often included for eligible children |
| Underwriting | Full medical, lifestyle and family history |
Who is this for?
- Homeowners who could not afford their mortgage after a serious illness
- Self-employed people without employer sick pay
- Families relying on one main income
- Business owners who want personal financial resilience
- People wanting money to adapt their home or fund treatment
What does critical illness cover pay out for?
Critical illness cover pays out on diagnosis of a condition listed in the policy, as long as it meets the insurer's definition. Core conditions typically include cancer, heart attack and stroke, which account for most claims.
Many policies also cover dozens of other conditions and some less severe illnesses with partial payments. Cover depends on underwriting and policy terms. Some cancers or early-stage conditions may not qualify for a full payment.
Policies also have exclusions, for example for conditions you had before taking out the policy. Read the key features document carefully.
How is critical illness cover different from life insurance?
Life insurance pays on death or terminal illness. Critical illness cover pays while you are alive, after a qualifying diagnosis. Many people need both, because surviving a serious illness can be just as financially difficult as a death.
You can buy critical illness cover on its own or combined with life insurance. Combined policies usually pay once, whichever comes first.
For a couple with a joint mortgage, a policy covering both lives is common. Separate policies cost more but can pay out more than once across the household.
How much critical illness cover do I need?
Many people choose enough to clear or reduce their mortgage, plus a buffer to cover a period of reduced income. Others focus on a sum to give breathing space during treatment and recovery.
Critical illness cover is more expensive than life cover. Balancing it with income protection, which pays monthly, can give fuller protection within a budget.
Consider how long you might be off work, the cost of adapting your home, private treatment or care, and whether a partner might need time off too.
Remember that NHS treatment is free, but loss of earnings, travel, care and home adaptations are not.
Why do policy definitions matter?
Insurers word their definitions differently, and the detail decides whether a claim is paid. Two policies covering the same number of conditions can respond very differently in practice.
The Association of British Insurers sets minimum standards for core definitions, and many insurers go further. We compare definitions, partial payments and extra features such as children's cover, not just the premium.
Many insurers publish claims statistics showing how often and why they pay. These can help when comparing, alongside the policy wording.
What extra features should I look for?
Beyond the core conditions, policies vary in ways that matter at claim time.
- Partial payments: smaller payouts for less severe conditions, such as some early-stage cancers.
- Children's cover: a lump sum if an eligible child is diagnosed with a covered condition.
- Total permanent disability: pays if you become permanently unable to work, under the policy definition.
- Support services: second medical opinions, nurse support or counselling.
- Waiver of premium: premiums paid for you if you cannot work through illness.
What affects the cost of critical illness cover?
The premium depends on your age, health, smoking status, family medical history, occupation, the amount of cover and the term. Critical illness cover usually costs more than life cover alone because a claim is more likely.
Guaranteed premiums stay the same for the term, while reviewable premiums can increase. Buying younger usually costs less, but the right time is when someone relies on your income.
We will explain the trade-off between cost, definitions and the amount of cover, so you can make an informed choice.
Why might a claim be declined?
The most common reasons are that the illness did not meet the policy definition, or that relevant information was not disclosed on the application. Insurers check medical records when a claim is made.
Answer every question fully and honestly, and tell the insurer about changes before the policy starts. If in doubt, disclose. Getting this right at application is one of the most valuable parts of advice.
If a claim is disputed, you can complain to the insurer and then, if needed, to the Financial Ombudsman Service.
How we arrange it
- Free 15-minute call
- We review your mortgage, income and existing cover
- We compare definitions and insurers
- Application and medical underwriting
- Policy starts, ideally reviewed every few years
Frequently asked questions
Is critical illness cover worth it?
It can be valuable if a serious illness would leave you unable to pay your mortgage or bills. Many people survive conditions like cancer or heart attacks but face months of reduced income. Whether it is worth it depends on your savings, employer benefits and budget.
What illnesses are covered by critical illness insurance?
Most policies cover cancer, heart attack and stroke, plus a list of other serious conditions such as multiple sclerosis or major organ transplant. The list and definitions vary by insurer. Some conditions only qualify once they reach a certain severity.
Is a critical illness payout taxable?
Personally owned critical illness payouts are usually free of income tax and capital gains tax. Policies paid for by a business can be treated differently. Take advice on your own position. Business-owned policies, such as key person cover, may be treated differently depending on how they are set up.
Can I get critical illness cover with a pre-existing condition?
Possibly. The insurer may offer cover with an exclusion for that condition, increase the premium or decline. The outcome varies between insurers, so comparing the market helps. You must disclose all relevant medical history. Some insurers may postpone a decision if you are awaiting tests or treatment.
Does critical illness cover include children?
Many policies include children's critical illness cover for eligible children at no extra cost, usually paying a smaller lump sum. Age limits and conditions apply, and the details differ by insurer. Check the payout amount, age limits and which conditions are included before relying on it.
Can I claim more than once?
Most standard policies pay once and then end. Some policies offer partial payments for less severe conditions while cover continues, and a few products allow multiple claims. Check the terms before you buy. Policies combining life and critical illness cover usually end after the first claim.
What is a survival period?
A survival period is the time you must survive after diagnosis before a claim is paid, often 10 to 14 days. If you die within that period, a combined life policy would usually pay out instead. Some insurers have a shorter survival period or none, so it is worth comparing.
Should I choose level or decreasing critical illness cover?
Decreasing cover reduces over time in line with a repayment mortgage and is usually cheaper. Level cover keeps the same payout, which is useful for interest-only mortgages or general financial protection. Many people choose based on what the money needs to cover.
Important: Protection policies are subject to underwriting, exclusions and the policy terms. Cover is not guaranteed and will stop if you stop paying premiums. Policies have no cash-in value.