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What is Critical Illness Insurance and What Does It Cover?

Critical Illness Cover is an insurance policy that will pay out a cash lump sum if you suffer from one of the serious illnesses listed under the policy.

The three most common critical illness claims are for some forms of:

Cancer
Heart attacks
Strokes

As well as the above ‘big three’ conditions, Critical Illness Insurance covers typically anywhere between around 10 to more than 100 serious or critical illnesses. This will depend on your insurer.

Other common conditions covered include:

Multiple Sclerosis
Permanent loss of vision / hearing
Loss of limbs
Motor Neurone Disease
Organ failure / transplant

Each insurer has their own definitions of these illnesses, which effectively sets a ‘threshold’ for how serious that illness has to be before you can make a successful claim.

Do I Need Critical Illness Cover?

If you develop a critical illness, this insurance policy is designed to pay out a lump sum.

You can use it to repay a mortgage, keep up with the bills or adapt your home to suit a new disability – however you use it, the cash can prove a hugely valuable lifeline.

Unfortunately, no one can ever be sure what life has in store for them. A serious illness could strike at any time. Statistics show the risk of many critical illnesses is rising in the UK, even among younger people of working age.

Major Illnesses: The Statistics

Worldwide there will be 28 million new cases of cancer each year by 2040. UK incidence is ranked higher than three-quarters of Europe. (Cancer Research UK)
More than 900,000 people in the UK have survived a heart attack (British Heart Foundation).
Of the 850,000 people who currently have dementia in the UK, more than 40,000 are under 65 (Alzheimer’s Society).
There are 340,000 people registered as blind in the UK (Royal National Institute of the Blind [NHS Digital 2021, Stats Wales 2020]).
The Multiple Sclerosis Society estimate that around 110,000 people are living with MS in the UK, with 5,200 new cases diagnosed each year (Gov.uk [The Health Improvement Network 2018]).

Not every incidence of one of these illnesses will be covered by Critical Illness Cover. Less severe forms of conditions such as cancer or heart attack may not be included in the wording of your policy, so it’s important to check definitions carefully.

How Does Critical Illness Cover Work?

You take out a policy, choosing how much cover you need and the length of the policy.
You suffer from a critical illness as defined by the policy wording during the term of your cover.
You make a claim, submitting any supporting medical evidence the insurer requires.
Once the claim is accepted, the insurer pays out. If your illness is severe enough to receive the full sum assured, the policy terminates.
The cash can be used for a range of needs, such as meeting financial obligations or modifying a home to accommodate a new disability.

How Much Critical Illness Insurance Do I Need?

The amount of cover you choose doesn’t need will really depend on your personal circumstances and your budget.

However, here are some broad considerations you may wish to take into account when working out how much insurance you need:

How much is outstanding on your mortgage
Any other outstanding debts
Daily living expenses for you and your family
Medical / nursing / care home fees
Private medical treatment – both the cost of treatment itself and, if necessary, funds to travel abroad to have it.

You’ll also have to consider Critical Illness Cover underwriting limits when you’re insuring yourself.

These are thresholds which, once you cross, the insurer will require further medical evidence such as a GP Report, bloods or a full medical before your policy can be accepted.