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Is critical illness insurance worth it?

Jenni Hill
Last Updated 28 March 2024

Critical illness insurance can protect you and your loved ones from the financial impact of a serious illness or injury. If you’re diagnosed with a listed medical condition during your policy term, you could receive a tax-free lump sum, regardless of whether you’re able to work or not. But is critical illness insurance worth it and how much does it cost?

In this guide

What illnesses fall under critical illness?

The exact illnesses covered can vary from one provider to the next, but the following conditions are usually included in critical illness policies:

  • Cancer
  • Heart attack
  • Stroke
  • Multiple sclerosis
  • Kidney failure
  • Coma
  • Organ transplant
  • Brain tumour
  • Loss of speech
  • Lung disease
  • Bacterial meningitis
  • Dementia

All critical illness insurance policies must cover stroke, heart attack and cancer as outlined in the Association of British Insurers (ABI) Minimum Standards guide, but if your condition doesn’t meet the criteria laid out by the ABI, you might not be covered.

Some insurance providers go above and beyond the ABI’s minimum guidelines, exceeding its criteria and covering a much wider number of illnesses. If you’re looking for comprehensive cover, speak to our team of insurance specialists

What is not covered by critical illness insurance?

Most insurance providers won’t cover illnesses relating to self-inflicted injuries, criminal acts, living outside the UK, flying or failing to take medical advice. You might also struggle to get cover for the following:

Pre-existing health conditions

Insurance providers are unlikely to cover existing health conditions and in some cases, they may refuse to cover medical issues you’ve had in the past - even if you’ve made a full recovery. If you have a pre-existing health condition that makes you more susceptible to other conditions in future, your insurance provider may agree to provide you cover while excluding the conditions you’re statistically more likely to get. 

Other providers may see your condition differently and offer you protection from their full range of illnesses. If you’re worried about your ability to get cover due to a pre-existing health condition, speak to one of our insurance specialists

Hazardous sports or hobbies

Some insurance providers won’t cover injuries or illnesses that occur as a result of hazardous sports or hobbies. So if you’re an MMA fighter or you break your leg after falling off a mountain bike, you might not be covered. Thankfully, some insurance providers will focus on the positives of regular exercise rather than the risks. Working on a dry ski slope might make you more susceptible to knee injuries, for example, but living an active lifestyle will also reduce your chances of other health conditions. 

If you’re an athlete or adrenaline seeker, speak to an insurance broker to increase your chances of getting critical illness cover. With thousands of policies to choose from, the hardest part is knowing where to look. 

Alcohol or drug abuse

If you’re hurt in an accident while under the influence of drugs or alcohol, your insurance provider may refuse to pay out. Insurance providers will also usually reject claims for illnesses that occur following alcohol or drug abuse. 

Is it worth getting critical illness cover?

Critical illness cover isn’t essential, but it can give you financial support, peace of mind, and potentially even better healthcare in the event of a serious illness or injury. 

Here are a few things to think about:

Could you still afford your essential living costs if you were unable to work?

If you have a significant amount of money in savings or you have financially comfortable relatives who could support you for an extended period of time, critical illness cover might not be worth it. If, however, you have people who depend on you financially or your savings wouldn’t last you very long, critical illness cover could offer valuable protection.

Do you or your spouse/civil partner have access to serious illness cover or a generous sick pay package through work?

If you’re employed, take a look at your contract to find out exactly what you’re entitled to if you’re ever unable to work for an extended period of time. If your employer only offers statutory sick pay and this isn’t enough to meet your needs, a critical illness payout could help you avoid getting into financial difficulty.

Whereas if your employer offers a generous extended sick pay package or discounted serious illness cover, taking out your own critical illness policy might not be necessary. 

Keep in mind that if you switch jobs in future or you’re ever made redundant, your next employer might not offer the same benefits. Since your insurance provider will take your age and health into account when you apply, taking out a policy when you’ve got a new job may result in higher premiums. 

Are you entitled to state benefits?

You may be entitled to state benefits such as universal credit, disability living allowance, and personal independence payments. If your benefit entitlement isn’t enough to cover your expenses, critical illness cover could help you avoid financial stress. 

Are you better suited to income protection?

You may be better suited to income protection, a type of insurance policy that pays out if you’re unable to work due to a serious illness or injury. Rather than paying you a one-off lump sum, you’ll get regular payments which you can put towards your mortgage or rent, household bills and other expenses. 

Your payments will usually be worth between 50% to 65% of what you’d usually earn, but some providers will offer more than this. The exact amount will depend on your circumstances, your chosen insurer and the agreed policy terms. 

Pros of critical illness cover

Keep on top of essential outgoings

If you’re unable to work due to a serious illness or injury, a critical illness payout could help you pay your rent or mortgage, bills, childcare costs 

Cover medical costs

You can also use the payout to cover costs associated with your medical condition. You might hire help around the house, pay for private medical treatment or make alterations to your home, for example. 

Tax-free payout

A critical illness cover payout will be completely tax-free, no matter which provider you choose.

Cons of critical illness cover

Won’t pay out on death

Critical illness cover will only pay out if you’re diagnosed with an illness or injury listed in the policy documents. If you pass away, your policy will end and no payment will be made. If you have a partner or children who depend on you financially, a life insurance policy may be suitable.

Not all illnesses are covered

Critical illness policies cover dozens and sometimes even hundreds of medical conditions, but many illnesses won’t be covered. 

For example, although all critical illness policies must cover cancer in accordance with the ABI’s Minimum Standards guide, the ABI’s guidance doesn’t include the following:

  • Neuroendocrine tumours
  • Severe aplastic anaemia
  • Advanced hodgkins disease
  • Advanced non-hodgkins lymphoma
  • Multiple myeloma
  • Advanced chronic lymphocytic leukaemia

Which is better life insurance or critical illness?

Life insurance and critical illness cover have different purposes, so the right protection for you will depend on your personal needs and finances. While critical illness insurance will provide you with a tax-free lump sum if you’re diagnosed with a listed illness or injury, life insurance will pay money to your beneficiaries if you pass away during the policy term. 

You can take out life insurance and critical illness insurance at the same time, if you wish. Many insurance providers bundle the two products together by offering life insurance customers the option to add critical illness protection to their policy. 

This can work out cheaper than taking out two individual policies, but the most affordable option for you will depend on your personal circumstances.

To find the best life insurance policies, critical illness cover and income protection for you, speak to our team of expert advisers. 

Get expert advice on the right policy for you

Choosing the right cover can be overwhelming. Get in touch with our team of insurance specialists today and we’ll compare hundreds of income protection, critical illness, mortgage protection and life insurance policies until we find the right cover for you.

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