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Critical Illness Cover vs Health Insurance

LifeSearch author Sophie Cussons
5 min read

by Sophie Cussons, Marketing Executive

See author bio

Sophie began as a Protection Adviser at LifeSearch in 2017, and now brings her experience to Protection Content.See author bio

Guide last reviewed 10 Oct 2023

Everyone gets ill to some degree in their lives; whether that’s a sickness bug, a chronic illness or something really serious - like man flu! Just kidding. But deciding on the right insurance product to protect you against the financial complications that come with getting a serious illness can be tricky, especially given the choice of policies and types of insurance out there.

You might have heard, and guessed by the name, that health insurance or critical illness cover for example are amongst the best options for making sure that you’re covered for becoming seriously ill. So, what exactly do these terms mean?

What is health insurance?

This one’s an especially slippery term here in the UK. When many of us hear the term ‘health insurance’, we tend to think of private medical insurance, which thankfully isn’t something that great numbers of us have to take out on these shores, thanks to the National Health Service (NHS), which provides free healthcare to most UK residents.

Of course, even in the UK, private health insurance absolutely has its merits. It can be great for supplementing what the NHS already offers, potentially giving you more choice as to the level of care you can get, and how and when it is provided. 

However, some people can get this form of health insurance confused with what was once widely known as permanent health insurance (PHI). The latter is a now a largely forgotten name for what is today usually called income protection insurance. 

Income protection cover pays you a regular income if you’re not able to work because of sickness or disability. For that reason, it doesn’t directly cover medical costs in the same way as private health insurance does - but you could always use the replacement income that it gives you to cover these medical costs.

So, how does critical illness cover differ from these options?

As for critical illness cover.. well, that’s different again. It’s a form of insurance that pays out a lump sum or income if you are diagnosed with one of the serious illnesses that the given policy covers. 

Income protection insurance (permanent health insurance) and critical illness cover have a lot in common, so it’s understandable if you get them confused. Both of these products can be invaluable sources of financial help if you suffer a serious illness, and both of them also give you the freedom to spend the resultant payout any way you like. With the NHS available to cover the most obvious healthcare costs, you might want to use the funds to help you keep up with your mortgage payments, or any other ongoing costs that you might have. 

Another thing that income protection insurance and critical illness cover have in common is exclusions to the policy - in other words, certain illnesses that they don’t cover. So, whichever of these product you most like the look of, it’s important to run the rule carefully over the small print. 

As for differences between the products, critical illness tends to provide more of a ‘one-off’ response to future illness than income protection. Also, the two forms of cover tend to vary in what they class as an illness or injury. Critical illness policies usually explicitly state which illnesses are covered, which could be risky if you develop another condition that isn’t mentioned in the policy that stops you from being able to work, which your policy won’t pay out for.

Income protection policies typically use a broader definition of illness or injury, for which you need to be signed-off in order to claim on. You can’t just be diagnosed with a condition that stops you from working and that isn’t set out as an exclusion in the policy documents, then expect the policy to pay out.

We can help you to make sense of the world of health insurance

With a few different options out there, it really helps to have experts on hand that you can talk to and who will be able to separate the more relevant from the less relevant policies for your circumstances and needs.

Find out your critical illness insurance options in comparison to health insurance

An expert adviser from LifeSearch can answer your questions, explain what options are available and provide fee-free quotes so you know what's right for you.

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LifeSearch author Sophie Cussons
Sophie Cussons Marketing Executive
Sophie began as a Protection Adviser at LifeSearch in 2017, helping customers to Protect the lives they love. She now brings her experience to Protection Content within the Marketing team. Sophie’s a passionate Street Dance teacher in her spare time, and teaches children and adults all the right moves.
See all articles by Sophie Cussons
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