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Critical Illness Insurance Review

We explain what critical illness insurance is, how it works and the pros and cons of these policies

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 3 October 2022

9 min read

Critical Illness Insurance Review

A big worry for many people is what would happen to their home and family if they were to suddenly become seriously ill and unable to work.

It is a big question and an important one, as we never want our loved ones to struggle with basic bills and costs. Luckily, there is an insurance policy designed to cover you in exactly this kind of situation.

Critical illness insurance is a helpful policy to have, but it’s possible you don’t know much about it. In fact, you might never have even heard of it before. We aim to help you learn more about this type of cover and how it can help you protect your family.

What is critical illness insurance?

Critical illness insurance is a policy that will pay you a tax-free cash lump sum if you get diagnosed with a critical (serious) medical issue. The policy works as a safety net, providing you with financial support if you became seriously unwell.

The important things to remember about critical illness insurance are:

  • To be able to claim, the illness you have must be included in the terms of your policy
  • There are a wide range of options for cover and some insurance companies will cover more illnesses and conditions than others
  • You can choose the level of cover that best suits your needs and budget
  • Often, you can get critical illness cover as a combined product with your life insurance policy
  • It can be an affordable way to have some financial security in place, in the event you became very ill

Anyone can apply for a critical illness insurance policy, as long as:

  • They are aged 18 or over
  • They are a permanent UK resident

Critical illness cover could help you replace any income you may lose if your health left you unable to work for a while. The pay out from a critical illness claim can be used to pay for things such as:

  • Mortgage repayments/rent
  • Childcare costs
  • Medical bills and expenses
  • Cost of living
  • Household bills (utilities)
  • And more…

What is covered by critical illness insurance?

Critical illness cover is a very flexible policy and can cover you for a wide range of different illnesses and medical conditions. You can take out as much or as little cover as you need and can choose the provider offering the policy that best suits you.

You should check the terms and conditions of any insurance policy carefully, to make sure you have a good understanding of exactly what you are covered for.

Below we have all the main insurance providers that sell critical illness cover and how much cover each one provides, to help you assess what seems the right choice for you.

Insurance provider Conditions covered by standard or ‘core’ cover Conditions covered by  ‘enhanced’ cover (if available) 
Aegon 51 conditions covered overall  
39 conditions will pay out 100% of the amount (£s) you are covered for  
12 conditions will pay out 25% of the amount (£s) you are covered for OR £25,000 (whichever is the lower amount) 
Aegon does not offer enhanced critical illness cover. 
AIG 25 conditions covered overall  
23 conditions will pay out of 100% of the amount (£s) you are covered for  
2 conditions will pay out 25% of the amount (£s) you are covered for OR £25,000 (whichever is the lower amount) 
50 conditions covered overall  
30 conditions will pay out 100% of the amount (£s) you are covered for  
20 conditions will pay out 100% of the amount (£s) you are covered for OR £35,000 (whichever is the lower amount) 
Aviva  53 conditions covered overall  
42 conditions will pay out 100% of the amount (£s) you are covered for  
9 conditions will pay out 20% of the amount (£s) you are covered for OR £20,000 (whichever is the lower amount)  
2 conditions will pay out 25% of the amount (£s) you are covered for OR £25,000 (whichever is the lower amount) 
Aviva does not offer enhanced critical illness cover. 
Canada Life 96 conditions covered overall  
52 conditions will pay out 100% of the amount (£s) you are covered for  
44 conditions will pay out 20% of the amount (£s) you are covered for OR £20,000 (whichever is the lower amount) 
Canada Life does not offer enhanced critical illness cover. 
Guardian 1821 76 conditions covered overall  
54 conditions will pay out 100% of the amount (£s) you are covered for  
22 conditions will pay out 20% of the amount (£s) you are covered for OR £50,000 (whichever is the lower amount) 
Guardian 1821 does not offer enhanced critical illness cover. 
Legal & General 39 conditions covered overall  
37 conditions will pay out 100% of the amount (£s) you are covered for  
2 conditions will pay out 25% of the amount (£s) you are covered for OR £25,000 (whichever is the lower amount) 
Legal & General does not offer enhanced critical illness cover. 
LV= (Liverpool Victoria) 40 conditions covered overall  
38 conditions will pay out 100% of the amount (£s) you are covered for  
2 conditions will pay out 25% of the amount (£s) you are covered for OR £30,000 (whichever is the lower amount) 
87 conditions covered overall  
49 conditions will pay out 100% of the amount (£s) you are covered for  
38 conditions will pay out 25% of the amount (£s) you are covered for OR £25,000 (whichever is the lower amount) 
Royal London 67 conditions covered overall  
47 conditions will pay out 100% of the amount (£s) you are covered for  
20 conditions will pay out 50% of the amount (£s) you are covered for OR £30,000 (whichever is the lower amount) 
Royal London does not offer enhanced critical illness cover. 
Scottish Widows 40 conditions covered overall  
30 conditions will pay out 100% of the amount (£s) you are covered for  
10 conditions will pay out 25% of the amount (£s) you are covered for OR £30,000 (whichever is the lower amount) 
Scottish Widows does not offer enhanced critical illness cover. 
Vitality 153 conditions covered overall which will qualify for a pay out of between 5%-100% of the amount (£s) you are covered for, depending on how severe your illness is.  

Vitality rank illness severity on a scale from A (most severe) to G (least severe)  
182 conditions covered overall which will qualify for a pay out of between 5%-100% of the amount (£s) you are covered for, depending on how severe your illness is.  

Vitality rank illness severity on a scale from A (most severe) to G (least severe)    
Zurich 42 conditions covered overall  
40 conditions will pay out 100% of the amount (£s) you are covered for  
2 conditions will equal a pay out up to £25,000  
99 conditions covered overall  
51 conditions will pay out 100% of the amount (£s) you are covered for  
48 conditions will pay out 25% of the amount (£s) you are covered for OR £25,000 (whichever is the lower amount) 

Life insurance and critical illness cover

Life insurance is a good way to ensure your family is looked after if you were to pass away, and often insurance companies will offer optional extras on top of this.

It is common for people to take out critical illness insurance alongside their life cover – you can even get combined policies with some insurers.

UK insurance providers that offer combined life and critical illness policies include:

  • Guardian 1821
  • LV= (Liverpool Victoria)
  • Aviva
  • Scottish Widows

Although insurers often claim things like ‘we will cover you from £5 per month’, the truth is the cost of cover can vary a lot depending on the person applying.

You won’t necessarily have to pay a huge amount but be prepared that there are a few things that could increase the cost of your policy. These include things like:

  • The type of policy you want (level term or decreasing cover)
  • Your age (insurance will usually cost less the younger you are when applying)
  • Your general health and lifestyle (active and healthy people will generally pay less)
  • If you smoke or drink alcohol regularly
  • If you have any medical conditions
  • Your medical history
  • The level of cover you want (how many conditions and the payment amount (£s))
  • The insurance provider you choose

Critical illness cover and income protection insurance are similar types of insurance policies, and so can easily become confused. Below we have highlighted the key features of each policy, to help you better understand the differences between the two.

Income protection insurance Critical illness insurance 
Pays out a regular monthly income if you are unable to work for 4 or more weeks, due to injury or illness Pays out one tax-free lump sum payment if you are diagnosed with a serious illness covered by your policy 
Will pay out for most illnesses and medical conditions, provided they prevent you from working as normalWill only pay out for illnesses/conditions specified in your policy (some insurers will cover more conditions than others)
Several different types of policy available including short term income protection, long term income protection, guaranteed sick pay and personal accident insurance.You can receive full (100%) payments or partial payments depending on the condition you have and your insurers terms and conditions
Options available for self employed people as well as employed peopleCan be bought on its own or with a life insurance policy

Advantages and disadvantages of critical illness insurance

Pro Con 
The cash pay out received will be tax-free It can sometimes be hard to compare the policies on offer across different insurers 
A range of different options for cover, so you can be covered for the number of conditions that best suits your needs and budget You won’t be able to claim for conditions not specified in your policy documents 
Approx 98% of critical illness claims pay out Your illness/condition has to meet the criteria specified in your policy for you to be able to claim 
It is usually a simple process to claim on your policy if needed If you already have any medical conditions, the insurer could place an ‘exclusion’ on them. This means you won’t be able to claim for this condition or anything related 

You will always want the ‘best’ cover to protect yourself and your family. However, what the ‘best’ cover is will mean different things to different people. You need to consider:

  • How much cover do you realistically need?
  • How long could you afford to stop working for if you became ill?
  • Do you have any savings to fall back on if needed?
  • What level of cover is affordable for you?
  • What are you protecting? Are your claim payments intended to protect your mortgage, your family or both?

RECOMMENDATION: Once you have thought about these key questions, you should compare the policies available from a few different providers. Comparing quotes will be the easiest way to save on your policy.

What illnesses are covered by critical illness insurance?

There are many different illnesses and medical conditions that can be covered by critical illness insurance. You can choose to be covered for just the most common medical issues or for a wider range, depending on how much you can afford to spend.

If you haven’t got a big budget but still want some protection, AIG have a policy called Key3 critical illness cover. This will cover you only for the 3 main reasons people tend to claim on critical illness policies:

  • Cancer
  • Stroke
  • Heart attack

Other conditions commonly covered by critical illness insurance include multiple sclerosis, Parkinson’s disease and more.

As of February 2023, the insurance provider that covers the most medical conditions is Vitality. Recently, Vitality reworked their policies to offer 3 NEW critical illness policies with varying levels of cover to suit different budgets.

No matter the provider you choose, the provider will usually cover 36 main critical illnesses even if they don’t cover everything else.

Can I get decreasing life insurance with critical illness cover?

There are 2 types of critical illness cover that are offered by most providers:

  • Level term cover (family protection)
  • Decreasing term cover (mortgage protection)

Level term cover is when the amount of £s you are covered for will stay the same throughout the whole term of your policy. This is referred to as family protection.

Is critical illness insurance worth it?

This is a personal question and really depends on your own situation and circumstances. Critical illness cover can certainly be useful, but if you have savings in place or other insurance policies, you might decide it isn’t worth it for you.

How do I buy critical illness insurance?

There are a few ways that you can buy critical illness insurance, which is good as it gives you a few options to choose from. The main ways to buy critical illness insurance are:

It can be really helpful to get some extra advice, especially if you’re not 100% sure what you’re looking for from your policy and provider. Of course, if you have researched a few companies and are set on a particular policy you can go straight to them for your cover.

Resources

ABI – Record amount paid out to help families cope with bereavement, ill health and injury

Health and Safety Executive – Health and safety statistics (2021/22)

Gov.uk – Taking sick leave

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