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The pros and cons of Critical Illness insurance

The pros and cons of Critical Illness insurance

Dec 8, 2020

Being diagnosed with a serious illness is a stressful time. You may have to take an extended period off work. You may have to spend a lot of time in hospital or in the care of your family. Or, you may have to adapt your home or change your lifestyle.

With so many other things to worry about, financial stress is the last thing you need at what is likely to be an emotional time.

Critical Illness insurance is designed to provide financial support if you’re diagnosed with a serious illness. But what is Critical Illness insurance? And what are the pros and cons of Critical Illness insurance? Read on for answers to these questions and more.


What is Critical Illness Cover?


Critical Illness cover is designed to pay out a tax-free lump sum if you’re diagnosed with a serious illness.

Typically, you choose a fixed level of cover for a set period of time – for example, £100,000 cover over a period of 30 years. If you’re diagnosed with an illness covered under the policy during the term, the insurer will pay out the ‘sum assured’ (£100,000 in this example).

What illnesses are covered under Critical Illness insurance?

Most Critical Illness insurance policies are quite comprehensive and cover a wide range of conditions.

While the specific illnesses covered – and the severity of how these illnesses have to affect you – differ from provider to provider, you will find that Critical Illness insurance will generally pay out for the following:

  • Permanent and irreversible blindness, deafness, or loss of speech
  • Cancer, excluding some types and some less advanced cases
  • Cardiac arrest with insertion of a defibrillator
  • Coma with associated permanent symptoms
  • Dementia including Alzheimer’s disease – That results in permanent symptoms
  • Heart attack of a certain specified severity
  • HIV infection from a blood transfusion, physical assault, or accident at work
  • Kidney failure that requires permanent dialysis
  • Advanced liver failure
  • Permanent loss of hand or foot
  • Major organ transplant from another donor
  • Motor neurone disease that results in permanent symptoms
  • Multiple sclerosis
  • Parkinson’s disease that results in permanent symptoms
  • Stroke that results in in symptoms lasting at least 24 hours
  • Third degree burns covering a specified surface area of the body, face or head

In 2018, provider Royal London reported the most common reasons for a Critical Illness claim were cancer (64%), heart attack (11%), stroke (8%), multiple sclerosis (4%) and children’s Critical Illness (4%). 

The pros of Critical Illness insurance

Critical Illness insurance is designed to provide you with financial peace of mind if you’re diagnosed with a serious condition. So, there are many benefits to putting protection in place.

It covers a wide range of conditions

As we discussed above, Critical Illness insurance covers a wide range of serious medical conditions. The cover has evolved over the last couple of decades and, while most claims are for cancer, heart attack and stroke, most insurers cover a comprehensive range of conditions.

The illnesses covered do vary from insurer to insurer, so it’s worth speaking to an expert to find the right cover for you. Find out more about how we can help you.

Most claims are paid

One of the common myths that people have about Critical Illness insurance is that insurers look for any way possible to get out of paying a claim. A survey by Britain’s biggest insurer, Aviva, found that fewer than half of people (47%) believe a life insurance or Critical Illness insurance policy will pay out when a claim is made.

However, the truth is quite different. Figures from the Association of British Insurers (ABI) show that insurance companies have an exceptional record when it comes to paying Critical Illness insurance claims.

In 2019, insurers paid more than nine in ten Critical Illness insurance claims. Aegon paid 94% of claims, Aviva paid 93.1% of all claims, and Legal & General paid 92% of Critical Illness insurance claims.

In 2018, Royal London paid 91.2% of Critical Illness insurance claims with an average payout of almost £99,000. 

Most policies include children’s Critical Illness insurance

When you put Critical Illness insurance in place, many leading insurers build in ‘children’s Critical Illness cover’.

This means that the main policyholder can make a claim if their child is diagnosed with a condition covered under the policy. 

Note that some providers offer children’s Critical Illness insurance as a percentage of the sum assured under the adult policyholders’ policy. For example, there may be a cap of 25% of the amount insured under your policy, or a fixed cap of £25,000.

You can use the money for any purpose

If you’re diagnosed with a serious illness and your Critical Illness insurance pays out, you can use this money for any purpose. For example, you could:

  • Repay your mortgage or other debts
  • Replace your lost income if you have to take time off work
  • Pay for specialist medical care
  • Pay for adaptations to your home
  • Cover household bills and expenses
  • Take the holiday of a lifetime!

Peace of mind

One of the main benefits of Critical Illness insurance is the peace of mind it offers. You know that, if you were to be diagnosed with a serious condition, financial support would be available.

You can sleep at night with the reassurance that your loved ones would be able to remain in the family home, pay the bills, and maintain their lifestyle even if your income were to temporarily stop.

Critical Illness insurance also removes financial stress, enabling you to concentrate on making a full recovery.


The cons of Critical Illness insurance

While there are many convincing reasons to put Critical Illness insurance in place, there are some things you should bear in mind.

Critical Illness insurance doesn’t cover every single condition

While modern Critical Illness insurance covers a wide range of illnesses, it’s important to remember that not every medical condition is covered.

For example, if you were to fall and break your leg, break bones playing sports, or contract Covid-19, it’s highly unlikely that your Critical Illness insurance would pay out.

It’s also important to note that the severity of some conditions also determines whether your insurance will pay out. An insurer may deem that some minor types of cancer or a very mild heart attack might not be serious enough for them to pay a claim.

Working with an expert can ensure you get the right cover for your needs. For example, we work with many of the UK’s leading Critical Illness insurance providers and can find the right protection for you. We can also look at complementary insurance such as Income Protection to ensure you’re protected against a range of risks.

You can typically make only one claim

If you’re diagnosed with an illness covered under your policy, your insurer will typically pay out a lump sum equivalent to the sum assured. Your policy will usually then cease, meaning you couldn’t normally claim again if you became ill later on. 

Additionally, it would not normally possible to make a further claim on your death (unless you also had life insurance built into your policy).

Again, working with an expert can ensure that you get the right cover for you.


Compare Critical Illness insurance quotes online

With a wide range of different Critical Illness insurance policies available, and prices varying from insurer to insurer, it can pay to speak to an expert.

We’ll search the whole of the market to find the right cover at the right price. And, as we intentionally take a lower commission than the standard rate, we can save you money on the cost of cover.

Compare Critical Illness insurance now



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