Health Insurance

What is Critical Illness Cover in the UK?

Curious to know more about Critical Illness Cover? We break down all you need to know about this type of health insurance, and whether it's right for you.

The world of health insurance can be confusing. There are a variety of different types of cover out there, ranging from private health insurance to health cash plans. So where does critical illness cover fit in all this?

Don't worry, we'll tell you all you need to know including what is and isn't covered and importantly, whether you really need to invest in it.

Table of Contents

What is Critical Illness Cover?

In simple terms, critical illness cover provides financial support if you are diagnosed with any medical condition included in the policy. Your insurer will pay out a tax-free lump sum (i.e. a one-off payment) which can help cover the costs of treatment as well as other things, like rent or mortgage payments.

Note that critical illness cover is not the same as life insurance, which pays out money to an individual the policy holder has named in the event they pass away. One of the great things about critical illness cover is that you can use this money however you wish, as it is designed to support you whilst you are unwell.

What types of conditions are covered by Critical Illness Cover?

As with most types of insurance, the specific events (or in this case, medical conditions) that are covered will vary from insurer to insurer. So, if you are thinking about opting for critical illness cover make sure you read any policy documents carefully so you know exactly what is covered.

However, there are certain core conditions that are typically included. For example:

  • Stroke
  • Heart attack
  • Certain types and stages of cancer

Other examples of critical illnesses that might be covered in your policy include:

  • Multiple sclerosis
  • Deafness
  • Blindness
  • Major organ transplants
  • Parkinson's disease
  • Alzheimer's
  • Loss of limbs
  • Traumatic head injury

Many plans will also consider permanent disabilities you may have developed because of illness or injury.

What types of conditions are not covered by Critical Illness Cover?

Unfortunately, just like other types of health insurance, your policy won't cover everything. Whilst the list of exclusions will again vary depending on your provider, there are some illnesses that aren't usually covered. These include:

  • Hypertension (high blood pressure)
  • Non-invasive cancers
  • Non-permanent conditions, such as broken bones

Be aware of the specific terms and conditions of your policy, as many insurers will specify that a condition has to be a certain level of severity in order to qualify for a payout.

Under what circumstances will my Critical Illness Cover not apply?

OK, so let's say you take out critical illness cover. You might be wondering what types of situations you won't be covered for. Here are some scenarios that your policy typically won't cover:

  • If you don't survive a certain number of days (specified by your insurer) after diagnosis — for this, you'll need life insurance
  • If you pass away — if you have a joint policy with another person, the cover will still continue for the other policyholder
  • If you stop paying your premiums — as soon as you stop, your cover will stop no matter how much you've paid into your plan
  • Any critical illness that is not listed in your policy
  • Any critical illness you are diagnosed with after your policy ends
  • Any critical illness you were diagnosed with prior to taking out your policy (i.e. a'pre-existing' condition)

Another important point to remember for critical illness cover is that once your policy has paid out, your insurer won't pay out again unless you make an additional critical illness claim.

Do you really need Critical Illness Cover?

Critical illness cover may not be the best choice for you, and the issue of whether you really need to invest in it depends on your own healthcare needs and circumstances.

Critical illness cover might be a good option if:

  • You rely heavily on your income
  • You don't have enough in savings to cover the ongoing costs of living if you become seriously ill
  • Your employee benefits package doesn't cover extended periods of time off work

You may not need to invest in critical illness cover if the following apply to you:

  • You have sufficient savings to cover ongoing payments, such as rent and bills
  • You have minimal or no large financial commitments, such as a mortgage
  • You have no dependents (e.g. young children)
  • You have a partner who can help cover ongoing payments and any shared commitments such as a mortgage
  • Your employee benefits package fully or partly covers extended period of time off work

Remember, there are many different types of healthcare insurance out there, some of which may be more suitable for your needs. Make sure you do some background reading beforehand and think carefully before taking out any type of policy.

In the case of critical illness cover, we'd recommend taking a look at Income Protection Insurance, which may be a better alternative. You'll find they usually cover more illnesses and conditions and for a longer period if you are unable to work. Because of this, however, it is typically more expensive.

Whatever your decision, we always recommend prioritizing finding cover that best suits your needs rather than simply opting for what is cheapest. The last thing you need when you are seriously unwell is the stress of realizing your insurance doesn't cover what you thought it did!

How much is Critical Illness Cover?

The cost of critical illness cover will vary depending on your insurer as well as a variety of other factors, such as your age, lifestyle and medical history.

We’ve outlined the most common factors for you:

  • Policy type: a single policy (i.e. just for you) is often more expensive than taking out a joint policy
  • Your level of cover: the more comprehensive the cover the higher your premiums will be. Think carefully about what level of cover is best for your own circumstances to avoid paying more than necessary
  • Age: as with most types of health insurance, the younger you are, the cheaper your premiums are likely to be. This is because it is less risky for the insurer as younger age groups are statistically less likely to be diagnosed with critical illnesses compared to older age groups
  • Your medical history: those who have a history of illness and injury may find their premiums are higher, as your insurer will see you as more likely to make a claim in the future
  • Your lifestyle: certain habits, such as smoking, are linked to an increased likelihood of critical illness diagnosis. For this reason, those who engage in these behaviours will likely find their premiums are higher
  • Your occupation: your insurer may ask you about your job as some carry a higher risk of contracting health problems than others, therefore resulting in higher premiums

We've put together a handy guide that discusses these in more detail, as well as other factors that may affect the cost of health insurance. You can read this here.

How do I purchase Critical Illness Cover?

There are a few ways you can purchase this type of cover:

  • Online: many health insurance providers offer critical illness cover as a stand alone policy, or as an optional add-on to other types of plan. Critical illness cover is commonly purchased alongside life insurance.
  • Insurance broker: insurance brokers are essentially the middle man between an insurance company and you, the policy holder. It is their job to get to know you and understand your needs, so they can search the market to find the best policy for you. If you are slightly unsure about critical illness cover, or health insurance in general, an insurance broker might be the way to go.

Critical illness cover can be a lifesaver for some, so the importance of getting the right level of cover for your needs is paramount. If you are slightly unsure we would recommend seeking advice from a specialist insurance brokers in the first instance, as they are well versed in this type of cover and can answer any questions or concerns you may have.

FAQs

It’s very unlikely you will need to undergo any medical examinations in order to take out Critical Illness Cover. However, your insurers will need to ask you some important questions about your age, medical history and occupation in order to assess your application.

It is crucial you are open and honest, as any inaccurate information may lead to a claim being rejected further down the line.

If you are looking to purchasing critical illness cover in the UK you'll typically need to have resident status. Some insurers may place certain limits on their policies, such as age limits or limits on what conditions are covered. All of this information should be available to you prior to signing on the dotted line, so be sure to read your policy documents carefully and ask questions if anything is unclear.

This will depend on your personal circumstances and medical history. We've provided some examples of who may or may not need critical illness cover, however, everyone is different and we always recommend contacting your insurer or specialist insurance brokers directly for advice.

  • Critical Illness Cover: comes into effect when you have been diagnosed with a critical illness outlined within your policy, and you'll receive a one-off, tax-free payment to help you cover ongoing costs such as treatment or mortgage payments
  • Life insurance: only comes into effect when the policyholder passes away during policy term or if they are diagnosed with a terminal illness, and are not expected to live longer than 12 months. In this case, a lump sum is paid to beneficiaries named by the policy holder and is designed to provide financial support to your loved ones once you are gone

Yes, many insurers offer critical illness cover as an optional add on when you purchase life insurance.

No — in the UK these payouts are not considered to be income and so are not subject to income tax.

Yes — most insurers will offer you a 30-day cooling off period starting from the day in which you purchase you policy, where you can cancel and get a full refund.

If you wish to cancel after this period, you should still be able to though you may not be refunded any of the premiums you have made. Make sure you read the terms and conditions of your policy carefully and note that some insurers may charge a cancellation fee, too!

Emily Bunt

Emily is a psychology graduate from the University of Kent, who is currently contributing to the health insurance content at NimbleFins. She also works in healthcare strategy and planning at Lexica. Prior to this she worked in market research at Kantar, investigating consumer behaviour and decision making, as well as in a supporting role in the field of mental health. Learn more at LinkedIn.

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