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5 practical ways you can use your Critical Illness cover payout

5 practical ways you can use your Critical Illness cover payout

Sep 22, 2022

According to Cancer Research UK, 1 in 2 people will be diagnosed with cancer at some point in their lifetime.

The British Heart Foundation say that 260 people are admitted to hospital every day in the UK as a result of a heart attack.

And Brain Research UK say that, on average, someone in the UK has a stroke every five minutes.

Serious illness can strike at any time and can have a devastating effect on you and your loved ones. If you want to make sure you and your family receive financial support if you’re diagnosed with a serious medical condition, you’ve probably considered or even taken out Critical Illness cover.

Critical Illness cover is designed to pay a tax-free lump sum if you’re diagnosed with one of many conditions covered under your policy. These conditions range from cancer and multiple sclerosis to Parkinson’s disease or the loss of a limb.

The Association of British Insurers (ABI) report that, in 2021, insurers paid more than 18,000 Critical Illness claims. More than £1 billion was paid to support families across the country, with an average payout of almost £68,000.

If you’re diagnosed with a condition covered under your policy and you’re one of the 91% of people whose claim is successful, you may wonder how you can use this tax-free lump sum. Here are five practical ways your Critical Illness payout can benefit you.

Repay your mortgage

Your mortgage is likely to be the biggest financial commitment you make. So, repaying some or all of your home loan is one of the first things you could consider using your Critical Illness payout for.

Paying off your mortgage gives you the peace of mind that you can remain in your home and that you don’t need to worry about where your next repayment is coming from. This is particularly useful if you have to take an extended period off work to recuperate or undergo treatment.

Repaying your mortgage also means you free up some disposable income as you no longer need to make a payment to your bank or building society every month.

If your Critical Illness payout isn’t enough to repay your whole mortgage, you could consider repaying a lump sum. This would have the effect of reducing what you owe and, potentially, your monthly repayments.

Always speak to your lender before you do this to check you won’t face any early repayment charges for repaying part or all of the loan.

Replace your income

If you’re diagnosed with cancer, or you have a heart attack or stroke, it is likely that you will have to take an extended period off work.

Depending on your employer’s sick pay policy, this could see your earnings fall. Many companies pay full pay for a specified period before you would revert to Statutory Sick Pay (SSP) which, in 2022/23, is just £99.35 a week and only available for 28 weeks.

If you’re self-employed then, of course, you won’t receive any sick pay or employer support and so it’s even more vital that you put your own protection in place.

While your Critical Illness payout will typically be in the form of a lump sum, you can use this money to replace your income during the period you are off work. You could use it to meet your mortgage/rent and other essential bills and to maintain your standard of living while you recover.

Pay for adaptations to your home

If you’re living with, or recuperating from, a serious illness it may get harder to move around your home or do things like have a shower. Remember that Critical Illness cover also typically pays out for conditions such as loss of sight, total and permanent disability, or loss of a limb.

In these cases, you may need to adapt your home to make it easier to live with your condition.

Depending on the nature of the adaptations, these can be costly. So, you could use your Critical Illness cover payout to undertake this work, and to ensure your home is more suitable for your changing needs.

Pay for the additional costs associated with being ill

2021 research from charity Macmillan Cancer Support revealed that more than 4 in 5 people (83%) with cancer in the UK take a significant financial hit after a cancer diagnosis.

They found that more than 1 in 3 (39%) people are severely financially affected by their diagnosis. Among this group, the average financial impact reaches more than £1,000 a month (£1,038).

The additional spending can come from a range of extra and often unexpected needs, such as:

  • 54% of people with cancer see an increase in day-to-day living costs
  • 28% experience additional costs travelling to and from their appointments
  • 17% face higher household fuel bills.

As well as the extra expenses incurred, three-quarters of people with cancer suffer a loss of income.

Your additional expenses may be as simple as having to pay for travel to hospital appointments. Or, you may spend more time at home, pushing up your utility bills.

Whatever the reasons, you may find that you incur additional costs if you are seriously ill. So, your Critical Illness cover payout may be invaluable in this situation as it will enable you to meet the extra costs you face as a consequence of your diagnosis.

Pay for private treatment

NHS England figures reported by the Guardian in September 2022 show the number of people in England waiting for routine hospital treatments has jumped to a record 6.8 million.

As a result of this, millions of patients are paying for private healthcare. The newspaper reports that 1 in 10 adults in the UK have turned to the private sector or independent healthcare in just the last 12 months.

Of those, almost two-thirds (63%) did so because they faced long delays or could not access treatment on the NHS.

If you’re keen to receive treatment for your condition as quickly as you can, you may consider paying for private treatment. If you don’t have private health insurance, you could use your Critical Illness payout to meet the costs of any private treatment you have.

This could enable you to receive treatment more quickly or to avoid record NHS waiting times.

Get a Critical Illness cover quote online

As you have read, Critical Illness cover can provide vital financial support if you’re diagnosed with a serious medical condition.

You could use the tax-free lump sum to repay your mortgage, replace income, pay for private treatment, or adapt your home. Or, you could simply benefit from the peace of mind that there is money available to you, giving you one less thing to worry about at what is likely to be a stressful and emotional time.

As Critical Illness cover experts, we can help you to find the most appropriate protection for your needs. We work with dozens of the UK’s leading insurers and so we can scour the market on your behalf to find the most competitive price and most comprehensive cover for you.

Head to our website to get an online Critical Illness cover quote in minutes. Or, if you’d like to have a chat with one of our protection experts, get in touch to find out more.



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