Most people insure their home, car and mobile phone. However, fewer people consider how they would manage financially if they were diagnosed with a serious illness.
A major medical diagnosis can affect far more than your health. It may reduce your income, increase household costs and place pressure on savings at a time when your priority should be recovery.
What is critical illness cover?
Critical illness insurance normally pays a tax-free lump sum if the person covered is diagnosed with one of the conditions listed in the policy and survives for the required period. A diagnosis alone does not guarantee payment; the illness must meet the precise medical definition in the policy. Although they vary from provider to provider, common conditions are:
- Cancer
- Heart attack
- Stroke
- Multiple sclerosis
- Major organ failure
- Parkinson’s disease
- Permanent disability
Why might critical illness cover be important?
A serious illness can reduce your income, increase household costs and place pressure on savings. Your partner may also need time away from work to provide care. Macmillan Cancer Support reported in January 2025 that almost 3.5 million people were living with cancer in the UK. Its research has also estimated that four out of five people affected by cancer experience a financial impact, leaving them an average of £570 a month worse off.
- Repay or reduce a mortgage
- Replace lost earnings
- Pay normal household bills
- Fund private treatment or rehabilitation
- Adapt the home
- Cover hospital travel and parking
- Pay childcare or domestic support
Do critical illness policies pay claims?
The Association of British Insurers reported that £1.25 billion was paid through individual critical illness policies during 2025. The average individual critical illness payment was £67,000, and almost two-thirds of claims related to cancer.
What conditions are covered?
The number of conditions listed should not be the only way to compare policies. Definitions, partial payments, children’s benefits, survival periods, exclusions and support services can differ significantly between insurers.
- Definitions for cancer, heart attack and stroke
- Partial payments for early-stage conditions
- Children’s critical illness benefits
- Whether multiple claims are possible
- Survival periods
- Exclusions
- Additional support services
- Guaranteed or reviewable premiums
How much critical illness cover do I need?
The right amount depends on what you want the payment to achieve. A full mortgage-sized payment may offer greater security, but where budget is limited, some protection may still be more useful than none.
- Clear the mortgage
- Cover household expenditure for a set period
- Repay loans
- Fund time away from work
- Pay for home adaptations
- Supplement sick pay and savings
Is critical illness cover the same as income protection?
No. Critical illness cover usually pays a lump sum following diagnosis of a listed condition. Income protection normally pays a monthly benefit when illness or injury prevents you from working. Some people combine the two.
Can children be covered?
Many adult critical illness policies include some level of children’s cover, either automatically or as an optional extra. The benefit, conditions and age limits vary considerably.
Will my medical history affect the application?
It may. Depending on the information provided, the insurer may offer standard cover, increase the premium, exclude a condition, postpone a decision or decline the application. Different insurers can assess the same history differently.
When should I review my cover?
Protection should be reviewed after major life changes.
- Buying or moving home
- Marriage or civil partnership
- Having children
- Becoming self-employed
- Changing employer
- Promotion
- Additional borrowing
- Separation or divorce
- A significant change in income
Critical illness advice in Aberdare
Chris Hopkins can help identify the financial consequences of serious illness, check workplace benefits and existing policies, calculate a suitable amount of cover, compare definitions and assist with the application.
Considerations
Critical illness policies do not cover every illness or diagnosis. A claim will only be paid where the condition meets the definition and requirements set out in the policy. Critical Illness plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
Frequently asked questions
Is a critical illness payment taxable?
Payments from personally owned policies are generally paid free of income tax under current rules. Tax treatment can depend on policy ownership and may change.
Does critical illness cover include every type of cancer?
No. Policies use specific definitions and commonly exclude less advanced or less severe forms from a full payment.
Can I claim more than once?
Many traditional policies end after a full payment. Some modern policies allow additional or multiple payments, subject to terms.
Can I buy critical illness cover without life insurance?
Yes. Standalone critical illness policies are available.
Is critical illness cover worthwhile if I have savings?
That depends on how long the savings would last and what else they are intended for.
| Book an initial critical illness appointment
Could your finances cope if a serious illness forced you to stop working or change your lifestyle? Review your existing protection and compare suitable policies. Call: 07368 882092 Email: chris.hopkins@cardiffifa.co.uk BOOK YOUR INITIAL APPOINTMENT |
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