Why consider critical illness cover?

Recovering from a serious illness can take months. During that time your income may fall, particularly once any sick pay runs out, while the mortgage or rent, bills and family costs carry on. New costs can appear too: travel to hospital, parking, help at home, or changes to make daily life easier.

Critical illness cover is designed for that situation. A single payment at the point of diagnosis can take the pressure off, so decisions about work and treatment are made for health reasons rather than money ones.

The payment is usually made to you as a lump sum, with no restriction on how it is spent. People commonly use it for:

• •Time to recover: replacing income so you or your partner can take time off work.
• •Household bills: keeping up with rent or mortgage payments, utilities and everyday costs.
• •Additional childcare: covering the gap when you cannot manage the school run or care as usual.
• •Travel to treatment: fuel, trains, parking and overnight stays near a specialist hospital.
• •Home or vehicle adaptations: for example a downstairs bathroom, handrails or a car you can drive after treatment.
• •Reducing debt: paying off loans, credit cards or part of the mortgage to lower monthly outgoings.

If repaying your home loan is the main aim, our guide to critical illness cover for mortgage protection looks at how to match the amount and term to your borrowing.

Every policy lists the conditions it covers and sets out a definition for each. To claim, your diagnosis must meet that definition, not simply carry the same name. Some definitions require a certain severity, a specific treatment or a lasting effect. Policies also have exclusions, such as conditions you had before the cover started, and most require you to survive a short period after diagnosis before the benefit is payable.

Severity-based serious illness cover

Some insurers offer serious illness products that pay different amounts depending on how severe a condition is, rather than paying in full or not at all. A less advanced diagnosis may pay part of the cover, with more available if the condition progresses, subject to the policy terms. This can suit people who want support at an earlier stage, but the structure varies by insurer and is worth understanding before you choose.

Our critical illness cover product page explains how conditions, survival periods and partial payments work in more detail.

When deciding how much to arrange, it helps to think about:

• •How long you might want to be off work, and what your household would need each month in that time
• •Any debts you would want to reduce or clear
• •Extra costs you might face, such as childcare, travel or adaptations
• •How long you need the cover to last, for example until the mortgage ends or the children are independent
• •Your age, health, smoking status and occupation, which the insurer uses to set the premium

Critical illness cover usually costs more than life cover for the same amount, so many people balance the level of cover against what they can comfortably afford. We compare definitions and terms alongside price.

Critical illness cover pays once, as a lump sum, when a qualifying diagnosis is made. You receive it whether or not you return to work. Income protection pays a regular monthly income while you cannot work because of illness or injury, after a waiting period you choose, and it is not limited to a list of conditions.

Start with what you would need the money for, then look at how different policies define the conditions that matter to you. If you already have cover through work or an older policy, check what it provides before adding more. We can talk you through the options and show you how the definitions compare.