Let me ask you something. If you found out tomorrow that you had a serious illness that would leave you unable to work, what would you do? Would your family be able to pay the mortgage, the bills and the other costs of running a household if you were suddenly without an income?


It’s not a nice question to ask, especially at this time of year. But it’s an important one. The rate of things like heart attacks have been proven to spike at least 15% in the run-up to Christmas Day, and if you don’t have things in order it could leave your family in a bad position come the New Year. But it doesn’t have to be. Thanks to critical illness cover, you and your family can rest easy in the knowledge that even if the worst should happen, money is one thing you won’t have to worry about.


What Is Critical Illness Insurance?

Critical illness cover is a type of life insurance policy, but instead of paying out on your death, it pays out a tax-free lump sum if you are diagnosed with a critical illness or specific medical condition. The exact number and variety of conditions covered will differ depending on your insurer with anything up to 90 conditions, but there are four core conditions that tend to be covered by all critical illness policies:

  • Cancer
  • Heart attack
  • Stroke
  • Multiple sclerosis

These ones are important, as for women they make up the most common critical illness claims. Legal & General are one of the biggest Insurance Companies out there, and their claims report for 2017 shows that 64% of critical illness claims were for cancer (with female claims for cancer higher). Heart attacks made up another 10% of claims and strokes another 6%. So in total, 80% of all claims in 2017 were for Cancer, Heart attack and Stroke. The average age for a claim is 47 showing that critical illnesses can happen at any time and not just in old age. If you have critical illness cover in place and you are diagnosed with a condition covered by your policy, then you will be eligible for a pay-out to help support you and your family during a difficult time.


How Does It Work?

In a lot of ways critical illness insurance is similar to life insurance. You can take out a policy over a set amount of years (usually as long as your mortgage term or until you retire, which is later in life now for most people) and you pay premiums each month into that policy. You usually receive a one-off tax-free payment when a claim is paid. There are no rules on what you spend this on, so it could be used to help with living costs like mortgage payments, to take away money worries if sick pay isn’t there, enjoy time with family, or it could go towards paying for treatment or care.

Many insurers will also offer children’s critical illness cover and sadly this is also a top reason these days for critical illness claims, though usually the pay-out is limited to somewhere between £10,000 and £25,000. This does vary from insurer to insurer, so your Adviser will be sure to identify if this is a priority of yours and present this to you in your options.

Are There Any Exceptions?

Like any life insurance policy, it is important to read the fine print carefully so that you know exactly what your policy covers. The list of conditions your policy covers might be very long and even if your illness is on the list whether or not you get a pay-out and what size it is could depend on how severe or permanent the condition is. For example, some policies won’t cover some forms of easily treatable cancer, a mild stroke or a mild heart attack (which are often excluded based on severity). The insurers are increasingly doing more to help in this area so most now offer a set of reduced pay-outs for less severe critical illnesses like these.


One thing to bear in mind though is the fact that you are unlikely to be eligible to take out critical illness cover if you have already been diagnosed with a serious medical condition. For example, if you have just been diagnosed with cancer, you may not be able to take out a critical illness policy. The time to act isn’t when things start to go wrong – it’s when everything is fine.


Unfortunately, this is a situation we come across too often. That’s why we at the Money Guardian are trying to generate more awareness for critical illness cover and the benefits it can bring. If you run your own business, critical illness cover can literally keep things afloat if you were to suffer an illness or injury, and if you have a family to care for, it’s an obvious choice. If you would like to find out more about critical illness cover, please just get in touch with the team at The Money Guardian for your free consultation.