Diagnosis of a critical illness causes a lot of emotional devastation, but there can also be serious financial needs for you and those close to you.
What is critical illness cover?
Being diagnosed with a critical illness can have serious impacts on your work and home life. Almost certainly, a serious diagnosis will disrupt your ability to earn and you and your loved ones may face additional costs to cope in a new situation: Critical illness cover (also known as critical illness insurance), pays out a significant lump sum if you’re ever diagnosed with a life changing illness.
It’s important to note that different insurers cover different levels / severity of illness. So do check what’s covered and what’s not covered in your policy details.
What is life insurance?
Life insurance is probably the one you know. Although it can come in a few different forms, life insurance pays out a lump sum or a monthly income, if you are to pass away within the term of your policy. A lump sum can be used to clear your mortgage, or a monthly income might be more suitable to cover those monthly essential costs of those you may leave behind.
Perhaps both a lump sum and monthly income would be best for you - our friendly advisers are here to talk you through your options.
What policy you choose is completely up to you, however we would always recommend having both life insurance and critical illness cover. This gives you that extra peace of mind that your loved ones are protected in both situations.
Combining life insurance & critical illness cover
Combining both life insurance and critical illness cover is always recommended. Not only do you double-up on your cover, there's also no "survival period" which comes as standard with most standalone critical illness policies.
Speak to one of our expert advisers to find out the best benefits for you.
What’s covered by a critical illness policy?
Exactly what illnesses you are covered for, can differ between insurers – which is why it’s important that you speak to one of our protection advisers, before taking out a policy. You will need to be diagnosed to a certain severity for your policy to pay out.
Most policies cover, but aren’t limited to:
- Heart attacks
- Cancers
- Strokes
- Multiple Sclerosis (MS)
- Parkinson’s
*It is important that you thoroughly read your policy documents to determine exactly which illnesses you are covered for, and to what severity.
You can get these by contacting your insurer directly, or by speaking to one of our advisers.
What isn’t covered by a critical illness policy?
Your policy documents will make it clear exactly what conditions and illnesses are covered. If it’s not listed, then it’s not covered.
Each insurer is different, but the conditions that are typically not covered are:
- Pre-existing conditions
- Hereditary illnesses (e.g. muscular dystrophy, sickle cell disease, Huntington’s disease)
- Diagnosis of a terminal illness
- An illness arising within the first 14 days of taking out your policy
- Some types of cancers
If there is a certain illness that you want to cover, speak to one of our advisers who can recommend a suitable insurer for your circumstances.
The costs of critical illness can include:
Medical bills
On the NHS, core medicine costs may be covered, but what about additional physiotherapy, counselling, specialist food, drink and supplements costs?
Equipment
Some practical equipment, such as specialist wheelchairs, may fall outside the NHS remit.
Travel
More hospital visits and check-ups mean more travel and parking costs. If your nearest treatment facility is 100 miles away that’s a significant cost you’ll have to bear.
Plus some more costs to consider...
Home modifications
With additional needs, your new life may require home modifications (new entranceways, more accessible bathroom) for you to live more comfortably.
Care & practical support
If your mobility or physical capacity are limited, the need for extra support – including cleaning, transport, cooking and gardening – may ramp up.
Loss of earnings
Critical illness may rob you of your ability to work, and therefore earn, for short, medium or long stretches of time.
The main variables that define the cost of your critical illness policies are:
Your age
As a rule-of-thumb, the younger you buy the cheaper life insurance is - your monthly premium is also locked in for the durations of your policy, unless you amend or add to it later down the line.
Buy young and you’re more likely to be fit and healthy.
Some policies can be ‘index linked’ to keep in-line with inflation, so your monthly premium will increase annually. But generally, the most common policy is a level or decreasing term one, that remains the same monthly cost throughout it’s term.
Your health
If you have a chronic or significant health issue, it may increase your risk in the eyes of insurers, and that’ll reflect in your premiums.
Note that having a health issue is not the barrier to cover it once was. Depending on what’s specified in your policy, If your condition is mild and your symptoms well-managed, you may not see any premium increases at all.
Even if you have a more serious condition, insurers today are much more accommodating. And there are specialist insurers whose whole business is covering people with health challenges.
Your lifestyle
Smoking, drinking, drugs, hobbies … no-one’s here to judge your lifestyle and choices, but they can have a bearing on your life insurance / critical illness cover prospects.
Smoking (including vaping and cigars), for example, is still probably the most significant variable in determining your life insurance price.
Your cover level
How much cover you want to leave your loved ones and/ or to act as a safety net if you get critically ill is up to you.
Why speak to an expert LifeSearch adviser?
There are many benefits to getting advice when taking out life insurance. Here are a few of the most important ones:
- Choose the right type of policy: There are many different types of life insurance policies available, each with its own benefits and features. A LifeSearch advisor can help you choose the type of policy that is best suited to your individual needs and circumstances.
- Get the right amount of cover: It is important to have enough life insurance cover to meet the needs of your loved ones after you die. However, it is also important to avoid overpaying for cover that you do not need. Our advisors can help you determine the right amount of cover for you.
- Understand the terms and conditions of your policy: Life insurance policies can be complex, and it is important to understand the terms and conditions of your policy before you sign it. A LifeSearch advisor can help you understand your policy and answer any questions you have.
- Get the best possible price: Financial protection advisors have access to a wide range of life insurance companies and policies. Not only can they can shop around to find you the best possible price, but they also take your medical history into account, to ensure that you are putting your policy with an insurer which is best suited to you.
- Get help with the claims process: If you ever have to file a life insurance claim, a financial protection advisor can help you navigate the process and ensure that your claim is processed quickly and efficiently.
How much does critical illness cover cost?
The average cost of a Life + Critical Illness policy, over the term of 25 years
| Starting Age | Cost to cover payout of £75,000 |
|---|---|
| 25 |
£19.14 |
| 30 |
£25.01 |
| 35 |
£31.66 |
| 40 |
£46.31 |
| 45 | £66.70 |
| 50 |
£99.91 |
| 55 |
£154.62 |
*Pricing information obtained 08/06/2023. This data is based on a non-smoker with no medical history.
Critical illness cover can be a standalone product but more often than not it is bought alongside life insurance - to cover all bases and because it’s usually more affordable to bundle.
How much you pay for critical illness cover depends on where you’re at now (age, health, circumstances), and how much cover you want – i.e. how much you want your lump sum payout to be.
Critical illness cover cost and cover calculator
Our simple calculator can help you to work out what insurance you need and give you estimated costs for different types of life cover. You can then speak to an adviser or buy online.
Frequently asked questions and tips about critical illness cover
If you’re diagnosed with a disease or condition that’s covered by your policy, just let LifeSearch know and we’ll claim on your behalf.
We were one of the first UK intermediaries to set up a dedicated in-house claims team, so we’re here to handle the paperwork for you. It’s one less thing for you to do when you’ve got bigger things going on.
We’ll liaise as much as possible with your doctors and deal directly with the insurers; always aiming for as swift a payout as possible. We’ll let you know if we need additional information or medical notes and keep you updated all along the way.
Usually no. If you pay for your policy yourself (i.e., it’s not part of an employer scheme / benefit) then you won’t pay tax on your lump sum.
If it is an employee benefit or scheme, you will pay tax.
How much tax relates to how much of your policy your employer covered. If they paid all your premiums, you’ll be taxed on all of your payout.
If you have a 50/50 arrangement (you pay half, your employer pays half) you’ll be taxed at source on the bit you didn’t pay – in this case 50%.
Yes you can and it’ll probably wind up cheaper. But bear in mind, joint cover usually pays once only. So if Partner A gets critically ill, the policy will pay out and Partner B will no longer be protected … unless they take out another policy
Many insurers offer a package of additional benefits and care. Services differ provider to provider but some of the below could be on offer through your insurer; and hugely helpful should you receive a life-changing diagnosis.
- Virtual GP services
- Health telephone hotline
- Counselling services
- Health support apps
- Private healthcare
- Physiotherapy
- Nurse services
- Nutrition consultation
- Online fitness classes
- Financial planning services
When you speak with a LifeSearch adviser, make sure to ask about the additional services insurers offer.
Contrary to popular belief, insurers pay out most of the time. Around 98% of the time across all protection products, according to the Association of British Insurers. When claims aren’t paid it’s usually because the policyholder provided inaccurate or dishonest health information.
Easy guides to help you get started
A quick guide to critical illness insurance
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