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28 May 2024
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Critical Illness Insurance Explained

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Critical Illness Insurance Basics

Critical illness insurance pays out either a lump sum or regular monthly income if you are diagnosed with a qualifying serious illness during the term of the policy.

This type of cover can be taken as part of a term life insurance, decreasing life insurance, standalone cover or as part of a family income benefit policy.

The types and range of illnesses covered by a critical illness policy vary from company to company. It Is advisable to read the insurance companies key facts document before you apply for your policy.

You can choose both the term of the policy and the level of cover, although some restrictions may apply.

What are the Pros & Cons of a Critical Illness Insurance Plan?


  • It will be useful if you would like to protect yourself or your families financially if you are diagnosed with a serious illness.
  • It is up to you how you spend the money.
  • You can have the pay out as a lump sum or a monthly income tax free.
  • If you select additional critical illness cover your life insurance will continue after a claim


  • Not all illnesses will be covered under the policy. It can be complicated to compare the key facts document of the providers Online.
  • You are sometimes not covered for pre-existing conditions.
  • Critical illness policies can be expensive.

What is Critical Illness Insurance?

If you suffer a qualifying serious illness your policy will pay out either a lump sum or a regular monthly income. When you make a claim you are allowed to keep the policy pay-out even if you make a full recovery.

They policy can be built into another life insurance policy on a level term life insurance, increasing term, decreasing term insurance (mortgage life insurance) family income benefit (pays a monthly amount) or as a stand alone critical illness policy. Once you have made a claim it is normal that you policy will cease and other benefits will therefore cease.

Critial illness Cover can be Set up on

Level Cover

  • lump sum is payable in the event of serious illness. This lump sum remains level throughout the period of the policy term.

Decreasing Cover

  • This lump sum decreases by a fixed amount during the period of the term, decreasing to nil by the end of the insured period. This form of cover is usually used for mortgages or other loans where the amount owed decreases year on year.

Increasing Cover

  • the sum assured is reviewed each year and the provider will write to you to inform you of the revised sum assured, typically increasing in-line with inflation. The premium will also rise if you accept the increase in your cover.

Family Income Benefit

  • This type of cover, gives your loved ones a regular monthly income not a lump sum. (this income is not taxable as earned income) But the income is only paid for the term of the policy, so the nearer the end of the policy you die, the fewer years it pays out for.
Family Income Benefit Quote

Additional options and areas for consideration include:

  • Stand alone Critical Illness: with stand alone plan in some cases the premiums can be higher than that of a comparable life and critical illness policy quotation.
  • Waiver of Premium: if illness prevents you from working your monthly premiums are paid on your behalf for after a set deferment period. Check the quotes Key Facts documents for each quoted produced.
  • Survival Period: most policies require you to survive for a specified period following a critical illness diagnosis, typically 30 days to 3 months. Check the quotes Key Facts documents for each quotation produced.
  • Permanent Total Disability: if this is not included you will be unable to claim if an illness or accident leaves you unable to work. Also, check the definition of 'permanent total disability'. Some policies define it as being unable to perform any job whilst others define it as being unable to continue in your previous occupation. Check the quotes Key Facts documents for each quotation produced.
  • Children's critical illness cover: some policies will pay out a fixed lump sum should one of your  children be diagnosed with a serious illness. The terms and conditions of policies vary and some charge an additional premium. Check the quotes Key Facts documents for each quoted produced.

Critical Illness Insurance Policies can be Split into Three Types :

Death or Earlier Serious Illness 

  • pays on either death or qualifying serious illness but not both.

Death & Serious Illness

  • pays on qualifying serious illness and death. Once a claim has been made against a policy, further claims cannot be made.

Standalone Cover

  • pays out once on diagnosis of a qualifying serious illness during the policy term.
Stand Alone Critical Illness Quote

What Illnesses are Covered on a Typical Policy?

Heart attack, certain forms of cancer, a stroke, and kidney failure, coronary bypass or transplant. For full details on the cover provided it is advisable to compare the Key Facts document for each providers quotes produced.

We have produced a typical list of the illnesses covered by a critical illness policy to give you a guide as to whether this type of plan is right for you.

Critical Illness Insurance Guide

Are all Providers the Same When I Compare Quotes?

With critical illness cover providers the additional types and range of illnesses covered vary. Vitality are currently covering 129 illnesses compared to Aegon's 68. (Source Webline 23/06/2023). Some providers will also make partial payments for less server case's of an illness, which can be beneficial if you want to stand a higher chance of being able to claim on your policy.

As the differences between providers policies can be so greatly we recommend you read the plans key facts document or speak to one of our advisors before you apply for your critical illness insurance policy.

What is Mortgage Life & Critical Illness Cover?

This would typically be part of a decreasing mortgage life insurance plan and usually will offer a lower monthly payment then a level plan. By having a mortgage life & critical illness insurance you could have peace of mind that you mortgage is cleared on diagnosis of a qualifying serious illness.

Why Compare Critical Illness Cover Quotes With Go Direct?

With Go Direct our Online critical illness insurance quote tool allows you to compare the leading insurance companies critical illness rates and illnesses covered. What's more Go Direct guarantee that at the time of application you will not get cheaper like for like cover as we rebate 50% of the initial commission the provider pays us back into your policy.

Instant quote

Do you Want Advice on Protection Insurance?

After looking through the critical illness cover information if you would like to speak to a financial advice, complete our inquiry form and we will contact you to discuses your protection needs.

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