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How does critical illness insurance work?

Critical illness insurance can be very useful, and we're going to explain exactly how these policies work

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 22 February 2023

5 min read

How does critical illness insurance work? 

It is possible you have heard of critical illness insurance, and you may even have a policy already – but do you fully understand how it works? 

Insurance policies aren’t always the easiest things to understand, especially the ins and outs of exactly how they work. Critical illness cover can be a very useful policy to have, but it’s important to fully understand how your policy works and what you are covered for. 

What is critical illness insurance? 

Critical illness insurance is a policy that will provide with a cash lump sum (that is tax-free), if you are diagnosed with a serious medical condition that is covered by your policy.  

This can be very helpful and give you some much needed extra support if your health leaves you unable to work or needing to make changes and adjustments to your home.

You could get a full (100% payment) or a partial payment (a percentage of the amount of £s you are covered for OR a set cash amount). Which payment you receive, will depend on the specifics of your policy. 

How do critical illness insurance policies work? 

Critical illness insurance policies work in the same way as most other types of insurance. 

  • You choose an insurance provider that is offering the policy you want 
  • You apply for your policy and once approved arrange your monthly payments (premiums) 
  • You pay monthly for your policy to keep your cover in place 
  • If you are diagnosed with a critical illness and need to claim on your policy, you need to contact your insurance provider to start the claim process
  • Your cover will last until your policy expires (you can choose how long you want your policy to cover you for when you apply) 
  • You will receive a pay out from your policy if your illness meets the terms and conditions of your policy and you survive for a set amount of time after you are diagnosed (14 days with most insurers)
  • You can choose to buy critical illness insurance on it’s own, but it is most often bought alongside or combined with a life insurance policy
  • You will be covered for a range of different illnesses/conditions (the exact number will vary depending on the insurer you choose)
  • Although insurers will each cover a different number of conditions, most policies will cover common conditions such as cancer, stroke, heart attack and multiple sclerosis

Learn more in our guide ‘Why should you review your cover?’

How many conditions will be covered in my policy? 

This can vary depending on which insurance provider you choose for your cover. One of the best things about critical illness insurance is that there are a range of options to choose from.  

Every insurance provider will cover a different number of medical conditions so you can choose the level of cover that best suits your needs and budget.  

Currently, Vitality will cover the most medical conditions at over 180. If you want very extensive cover, it could be worth looking at their policies. 

Note: Although, insurance providers will each cover a slightly different number of conditions, there are 36 that are generally covered by most insurers.  

How do I apply for critical illness insurance? 

You’ll be pleased to hear that in most cases applying for critical illness insurance is a straightforward process. You choose the insurance provider you want to apply to, and they will ask questions about: 

  • Your age 
  • Your occupation 
  • How much cover you need 
  • How long you want to be covered for 
  • Details about your general health and lifestyle 

If you have any pre-existing medical conditions or other lifestyle factors that might make you more likely to claim, the insurer won’t necessarily refuse to cover you, but they might place an ‘exclusion’ on your policy.  

Find out more about buying life insurance products with medical conditions in our guide ‘Pre-existing medical conditions life insurance’.

We also have several guides dedicated to ways you can save on your insurance cover including:

How do I claim on critical illness insurance? 

If you need to claim on your critical illness policy, the last thing you want is to be struggling or searching for information about how to do this.  

To claim on your policy, you will need to: 

  1. Make sure your illness or condition matches one specified in your policy documents (so you know your claim is valid) 
  2. Get in touch with the insurance company you have your policy with (you should usually be able to find a phone number or online form on their website) 
  3. Speak to the claims team over the phone or fill in the form and wait for someone to get back to you 
  4. Contact your doctor or GP for any medical information you need to provide to the insurer 
  5. Send through any additional information the insurer requests e.g. more information about your medical history  

Can I change or cancel my policy if I need to? 

You always have the option to change or cancel any insurance policy. There are many reasons you could decide to review or cancel your cover, and you can do so at any time. 

You might: 

  • Have found a better deal with another insurance provider 
  • Want to change the amount of cover in your policy or how long you are covered for (policy term) 
  • Want to cancel your cover entirely 

It doesn’t matter what reason you have for changing or cancelling your policy. It is important to be aware though that if you cancel your policy, you will likely pay more if you get another policy at a later point (due to being older than when you first applied). 

Insurers generally wont punish you for cancelling with things such as cancellation fees, but you will lose any premiums you have already paid.

If you’re thinking of switching your cover to a new provider, you may want to speak to an independent insurance expert before contacting your insurer to cancel. They can help you make sure you are definitely getting a better deal and can even find you cheaper cover elsewhere in some cases. 

Resources 

Aviva – The real value of critical illness cover 

Citizen’s Advice – Illness insurance 

Health and Safety Executive – Health and Safety statistics 

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