A lump sum if you're diagnosed with something serious
Critical illness cover pays a tax-free lump sum if you're diagnosed with one of the conditions listed in your policy and you survive the period set out in the terms — usually a short window after diagnosis.
It isn't there to pay medical bills. It's there so that a diagnosis doesn't become a financial crisis on top of everything else: so the mortgage keeps getting paid while you're not working, so your partner can take time off to be with you, so you can adapt the house if you need to.
What's typically covered
Cancer
Most policies include cancer of specified severity.
Heart attack
Heart attack is one of the conditions most commonly claimed for.
Stroke
Stroke is also among the conditions most commonly claimed for.
Other conditions
Depending on the policy, insurers commonly include conditions such as multiple sclerosis, Parkinson's, organ transplant, kidney failure, and loss of sight, hearing or speech.
The policy wording matters
The important detail is that cover is defined by the policy wording, not by the name of the illness.
Two insurers can both list cancer as a covered condition and still reach different outcomes on the same diagnosis, depending on how the condition is defined and what severity threshold applies.
Some policies also pay a smaller partial benefit for early-stage conditions. It's one of the main reasons to take advice rather than buy on price alone.
Children's cover
Protection for your children
Many policies include cover for your children automatically, paying a smaller lump sum if a child is diagnosed with a covered condition.
For a lot of parents this is the part of the policy that matters most, and the terms vary considerably between insurers.
On its own or alongside life cover
Standalone cover
Critical illness cover can be bought standalone, providing a lump sum following a qualifying critical illness diagnosis.
Combined with life insurance
A combined policy will typically pay out on the first event — either a critical illness diagnosis or death — and then end.
Two separate policies
Two separate policies usually cost more but may pay out twice. Which makes sense depends on your budget and what you're protecting.
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