Critical illness cover can be an absolute lifeline if you have a serious condition - yet it is one of the least understood protection insurances we offer. Put simply, it pays out a tax-free lump sum if you’re diagnosed with one of a defined list of life-changing illnesses, with the money designed to replace lost income or to pay for adaptations around your home. The problem is that those definitions can vary from insurer to insurer.

The good news is that the insurance industry has recently recognised the confusion around critical illness cover and the Association of British Insurers (ABI) has created a Guide to Minimum Standards to help consumers. And we’re here to explain things even further!

What is the definition of a critical illness?

A critical illness is a serious illness that will have a significant impact on your health and your lifestyle. Under the ABI’s Guide to Minimum Standards, which was published in 2018, critical illness insurance policies must cover heart attack, stroke and some types of cancer. The guide also states that policies must be clearly explained in ‘plain English’. 

Depending on the type of cover you choose and the policy you opt for, you may also have additional cover for a range of illnesses and conditions, including:

  • Multiple sclerosis
  • Parkinson’s
  • Major organ transplant
  • Deafness
  • Permanent disability
  • Head trauma

The key is that all insured conditions will be set out in your policy documents, so it’s essential to read them carefully and understand what is and isn’t covered in your hour of need. Financial information business Defaqto* rates 41 stand-alone critical illness products from 17 providers, with significant variation between the policies.

Of these products, for example, 28 include critical illness cover for children of the policyholder. The maximum age of eligible children ranges between 20 and 23, while some policies offer cover from birth and others have a minimum age of 30 days. Benefits of between £25,000 and £125,000 are available and the number of children’s conditions covered also differs. Our partner VitalityLife’s Comprehensive Cover pays out up to £125,000, includes 182 conditions and covers children up to the age of 23.   

ActiveQuote head of partnerships Rod Jones said: “Over time, insurers will change their definition of critical illness as medication and treatment improves. For example, a policy covering cancer 10 years ago could provide a much higher level of cover than a policy today, as some forms of cancer are now treatable.

“The terms of an original policy would remain valid for existing customers, but might differ for new policyholders. If you are looking to renew your policy, existing cover is something our advisors would take into consideration, as we would want to ensure any new cover doesn’t leave you worse off.”

Critical illness exclusions

Again, depending on the insurer with which you choose to take out your policy, you will find that different illnesses are excluded. Some policies specifically cover HIV and AIDS, while others state that these conditions are excluded. Some insurers, such as L&G, offer critical illness cover for armed forces personnel - although exclusions may apply around tours of duty - while others exclude servicemen and women. Some policies also exclude conditions resulting from taking part in hazardous sports, such as mountaineering, hang gliding and bungee jumping. 

Is critical illness cover the same as life insurance?

No. Critical illness cover is designed to financially protect the policyholder when he or she is ill, while life insurance is paid out to the policyholder’s loved ones, or beneficiaries, in the event of their death.

However, many life insurance policies include critical illness cover as standard or as an add-on and, for many people, it makes sense to buy them together. If you’re thinking of taking out critical illness insurance and already have life cover, check your policy to see if the critical illness element is included.

Is critical illness cover the same as terminal illness benefit?

No. Terminal illness benefit is an element of life insurance whereby a payout can be made early if the policyholder is expected to die within 12 months of the terminal illness diagnosis. It is often included as standard in a life insurance policy. If the policyholder survives beyond 12 months, they will not be asked to return the pay-out. 

Last year, our partner Scottish Widows revealed that just 13% mums have critical illness cover in place, leaving those without insurance and their families at financial risk. Our own research has also uncovered a critical illness gender guarantee gap, with women less likely than men to be offered the cover as a benefit of their employment.

Our customers often ask us: do I need critical illness cover or income protection? If you’re unsure which best suits your needs, read our guide! And our expert staff are here to answer all your questions and help you compare critical illness quotes on 0800 862 0373. 


* Data sourced on December 17, 2019.