Is Critical Illness Cover Really Critical?

August 18, 2020

Critical Illness cover is often seen as a Life Insurance or mortgage add-on, much in the same way that you can tick the box to add the hire car to the hotel, or the accidental damage cover to the TV, or the onion rings to your burger. But, while there is a certain amount of logic to marrying it up with those other two products, it’s actually a very different type of insurance which needs to be considered on its own merits.

What is Critical Illness Cover?

Critical Illness cover is health insurance that pays out if you are diagnosed with an illness defined as critical under the terms of your specific policy.

Even more useful is that the pay out is in the form of a tax-free lump sum, rather than monthly payments that form part of your income.

Like Life Insurance, Critical Illness cover offers peace of mind and protection should something unfortunate happen. If you fall seriously ill, a payout could take care of your bills, protect the family home, or perhaps pay for much-needed treatment or care. It’s the kind of thing that wouldn’t be high on your list to think about if you did suddenly receive a life-changing diagnosis, so having the cover in place in advance takes away the extra worry of how you and your family will cope financially in a difficult situation.

The cover could also protect you in the future, as the money could help should your future earning potential be impaired by your condition.

Finally, there’s the simple fact that the odds of getting a critical illness before you are 65 are much, much higher than the odds of you dying – especially as the care and treatment that you would receive for events like cancer and heart attack gets more and more effective as technology and medicines progress. That makes Critical Illness versus Life Insurance an even more interesting debate.

But there are many things to consider…

While it sounds nice and simple so far, it isn’t. Primarily, this is because the variety of conditions defined as ‘critical’ varies incredibly from insurer to insurer. If you believe that you’ll get a payout if you get a serious illness and can’t work, you might be right. But you could just as easily be wrong.

You see, there are some core conditions that are likely to covered by most policies, including things like cancer, heart attack, a major organ transplant or a stroke, but within those will be certain exclusions and considerations. For example, certain cancers, or certain stages of cancer, won’t be covered by all policies, and while losing your legs may be critical as defined by your policy, losing one leg might not be, even though it may still leave you unable to work. A major heart attack would likely trigger a payment, but a minor heart attack might not – despite the ramifications of having had one.

Apart from the policy itself, your situation may determine whether or not you feel Critical Illness Cover would be suitable for you. If you have a large family entirely dependent on you for income, then both Life Insurance and Critical Illness Cover would be up for discussion. If you died or could no longer work due to illness, your family are likely to need financial support.

But, if you’re a single person with no dependents, perhaps Life Insurance would be less relevant to you, and therefore Critical Illness cover, which would pay out money to you directly when you need it, would be the better option.

Hopefully, now you can see why it is absolutely vital to get the right policy in place for you and your situation.

Thinking about buying Critical Illness Cover?

We’re not here to tell you that you should or shouldn’t buy Critical Illness Cover, as it depends entirely on your own personal situation. That said, there are certain things you should absolutely do before you buy:

  • You have to read the small print. Before you buy anything, you need to know exactly what is and isn’t defined as critical under the terms of your policy. Cheaper isn’t necessarily better.
  • Disclose everything. If you fail to disclose that pre-existing medical condition, or a family history of something, then you might find your cover invalidated. It’s better to be open and upfront about everything that might be a factor, even if it does result in a slight bump in your premium.
  • Get advice. This is one instance where speaking to an independent financial advisor (IFA) would be a good starting point. For something like car insurance, or even a mortgage, working things out on your own is entirely possible these days. But Critical Illness Cover is much more complex. An IFA would be able to help you understand the different types of policy, why some are more expensive than others, and why certain policies may be right for you and your circumstances.

Got a question about Critical Illness Cover? That’s what we’re here for. Wondering whether you should add the onion rings? We’ll leave that one to you.


This article is for general use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

GreenSky Wealth Limited is authorised and regulated by the Financial Conduct Authority. FCA No. 629624. Registered Office as above. Registered in England and Wales, Company No. 07103441.