Critical illness cover explained
Critical illness cover pays a tax-free lump sum if you're diagnosed with a serious condition the policy covers. This guide explains what it covers, how much to take, and how it differs from life and income protection.
What critical illness cover pays for
Critical illness cover (CIC) pays a one-off, tax-free lump sum if you're diagnosed with — and survive — one of the specific serious conditions listed in the policy. Common covered conditions include heart attack, stroke, many cancers, multiple sclerosis and organ failure, though definitions and the number of conditions vary a lot between insurers. It's designed to remove financial pressure while you recover: clearing the mortgage, paying off debts, funding treatment or adapting your home.
Sizing your cover
A sensible target clears your mortgage and debts and replaces a few years of income to cover the recovery and adjustment period. Unlike life insurance you usually don't need to replace income for decades — most people aim for enough to stabilise finances for two to five years plus debt clearance. The calculator builds this from your figures.
CIC vs life cover vs income protection
These three products solve different problems. Life insurance pays out on death. Critical illness pays a lump sum on diagnosis of a listed condition. Income protection pays a regular monthly income if illness or injury stops you working, for any reason, until you recover or retire. Income protection covers a far wider range of situations than CIC; many advisers rate it the priority, with CIC as a useful addition for the lump-sum needs.
Combined policies
Read the definitions
The value of CIC is in the small print. Two policies covering "cancer" can differ on which stages and types are included. Look at the number of conditions, the severity definitions, whether children's cover is included, and any survival period (often 10–14 days). The cheapest policy is not always the best if its definitions are narrow.
Common mistakes
- Choosing on price alone. Narrow condition definitions can mean no payout when you expected one. Compare cover quality, not just cost.
- Not disclosing health history. Non-disclosure can void a claim. Answer medical questions fully and honestly.
- Assuming it replaces income protection. CIC pays once, for listed conditions only. Income protection covers far more situations with an ongoing income.
- Over-insuring the income portion. You usually need a few years of income, not decades — don't pay for more than you need.