The point
What it is actually for
A serious diagnosis usually brings a drop in income and a rise in costs at the same time. The lump sum can clear the mortgage, cover adaptations to the house, pay for treatment or simply buy you time to recover without worrying about the bills.
It is not the same as life cover and it is not the same as income protection. Plenty of people need more than one of the three, which is why the conversation starts with what would actually go wrong rather than with a product.
The detail
Why the wording matters more than the price
This is the single most important thing to understand about critical illness cover. Two policies with the same headline price can differ enormously in what they will actually pay for.
Insurers publish lists of covered conditions, and the definitions within them vary. One policy may cover a specific type of cancer at an early stage where another requires it to be more advanced. Comparing on premium alone is how people end up with a policy that declines their claim.
What is included
Common features
Most modern policies include more than people realise.
- A defined list of conditions, typically between 40 and 80 depending on the insurer
- Partial payments for less severe conditions, at a reduced percentage
- Children's cover, included as standard on many policies
- The option to combine with life cover, which is often better value
- Cover for a second, unrelated condition on some policies
Critical illness policies pay out only for the specific conditions and definitions set out in the policy. Cover is subject to underwriting and exclusions may apply.