Key Takeaways

  • Critical illness cover can be added to life insurance or as a separate policy
  • Critical illness cover pays a lump sum in the event of a pre-agreed illness, such as a heart attack, cancer, or a stroke
  • The funds provided can be used to pay for treatment costs, clear debts or to support your family
  • Policies vary in the number of illnesses covered, it's important to seek advice when choosing a policy to ensure it is right for you

What is Critical Illness Cover?

Critical illness cover is a type of protection insurance that pays a lump sum if you contract a critical illness. Illnesses such as a Cancer, heart attack, or stroke are usually covered, although this can depend on which type and the severity diagnosed.

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Is Critical Illness Cover Needed?

Critical illness cover is best used to remove the financial distress that can be caused by suffering from a serious illness. In the unfortunate event that it is needed to be claimed upon, the funds can be used to pay off Mortgages, help with the costs of medical treatment, or generally allow the claimee to focus on enjoying the time they may be limited to without needing to work.

You never know what is around the corner. It is sensible to think about your own circumstances and what the impact could be on you, and your family financially, if you were to be diagnosed with a critical illness.

  • How would you maintain your commitments? 
  • What would happen if you were not around?

These are never easy conversations to be had. Speaking with a professional adviser can help to take on the conversation in a pragmatic way that suits your personal circumstances. 

How does Critical Illness Cover work?

Critical illness cover will pay an agreed lump sum amount. You will make monthly premium payments for this. These policies can be set to pay a flat amount in the event of critical illness or they can be linked to your Mortgage. Linking to your Mortgage will allow for a cheaper premium, but the benefit amount will reduce year on year in line with your outstanding Mortgage debt amount. This type of critical illness policy is known as Decreasing Cover.

There are some Critical illness policies that payout only if you survive 14 days beyond diagnosis. However, Critical Illness cover can be included as part of a Term life insurance policy. If you opt for critical illness cover included in your term life insurance policy, if you are diagnosed with a Critical illness or pass away, your family will still be entitled to the benefit amount.

Like all insurance policies, there are varying levels of cover and that impacts the price. It is important to understand what level of cover you have in place, and what conditions are covered.

It is a good idea to seek advice about Protection insurance as often the cheapest policies do not cover what you think you may be covered for.

It's easy to get caught up looking at the price and if it is your intention to be able to clear debts, such as a Mortgage, having a cover amount less than your outstanding debts will still mean Mortgage repayments will need to be made. That would not remove the financial distress from the situation.

How does Critical Illness differ from Income protection?

Critical illness cover differs from income protection as it is paid in a lump sum specifically on the diagnosis of the illnesses covered. Income protection is used to replace income. It is paid monthly, based on circumstances that prevent you from working. To be eligible to make a claim with a Critical illness cover, you must have been diagnosed with one of the stated conditions. Unlike income protection, which is conditional. If you are unable to perform your own job, you can claim until you return to work. 

Can you get a joint Critical Illness Policy?

Yes, you can get a joint critical illness policy. This policy will cover two people but will only pay out once. If you opt for a joint insurance policy you will pay a combined premium amount. 

Children's Critical Illness Cover

The policy can also be extended to include children's critical illness cover. If the child is diagnosed with one of the included conditions you will be eligible to make a claim.

There is normally a maximum claim amount for children's critical illness cover which is generally up to £100,000 or 50% of your policy cover amount, whichever is lowest.

If you do need to make a claim for a child's critical illness, it will not impact the plan you have for yourself. This will continue to run on the same benefit amount that you have taken the policy for.

Is Critical illness insurance worth it?

To decide if Critical illness cover is worth it for you, you will need to think about your personal circumstances. When deciding what is important to you, you can consider the following points:

  • How would the money be used?
  • Would you be able to pay for any care that the NHS does not cover if it was required?
  • Would you be able to afford time off work to care for a loved one?
  • Would you value peace of mind?
  • What debts do you have that could prevent you from obtaining the best care?

People do not often consider the mental impact of dealing with a critical illness. If you are able to settle any financial stresses you may have this could have a helpful impact on your mental-wellbeing as you work toward recovery.

Critical Illness Cover Advice

When it comes to critical illness cover, seeking advice is essential. Critical illness cover is designed to provide financial protection in the event of a serious illness or medical condition. Consulting with experts in this field can help you understand the coverage options available and select a policy that suits your specific needs. These experts can guide you on the types of illnesses covered, policy terms, exclusions, and payout structures. They can also help you assess the appropriate coverage amount based on your financial obligations and potential medical costs. With their advice, you can make an informed decision and ensure that you and your loved ones are financially protected in case of a critical illness diagnosis.

Critical illness insurance covers a variety of cancers, heart attacks, and Strokes. However, not all types of these conditions will warrant an eligible claim. Policies can vary from provider to provider. The level of cover can change the cost of policies. Generally, the cheaper policies do not cover the most illnesses. It is therefore important to ensure your policy covers you for what you need it to.

Pre-existing conditions that are diagnosed before the policy was taken are generally not covered. However, there can be exceptions to this. It can also be the case that you can get cover after a certain period of time has passed. This is insurer specific. You will need to declare any pre-conditions when you are quoted. If you do not do this, your policy can become void.

The amount of critical illness cover you need will depend on your own personal circumstances. Factors to consider include: The amount of debt you have outstanding, your dependants, and existing work benefits. People do not often consider the mental impact of dealing with a critical illness. If you are able to settle any financial stresses you may have this could have a helpful impact on your mental-wellbeing as you work toward recovery.

You can speak with a financial adviser, or insurance adviser who specialises in Critical illness or protection insurance. The different cover options can make this a complicated product whilst already being a difficult emotional conversation. It is a good idea to seek advice from a specialist adviser who can help with more information.



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