How Much Critical Illness Cover Do I Need? UK Guide

You can adjust the amount of cover you take out according to your needs and monthly payments. Policies with more coverage tend to cost more.

What sets the amount:

• Your debts
• Your dependants
• Your work benefits
• Your take-home pay
• Your mortgage or rent payments
• Other insurance products you have

Check what the policy covers before you compare amounts:

• Whether your policy offers a payout of 25% or 50% of your lump sum for less serious illnesses
• The coverage for different types of cancer, because some policies won't pay out for the early stages of common cancers
• Whether you are covered for severe or permanent disabilities due to injury or illness
• How severely ill or disabled you need to be to make a claim

Critical illness cover supports you financially if you are diagnosed with one of the conditions included in the policy. It only pays out once, after which the policy ends.

The tax-free, one-off payment can be used to pay for:

• Your treatment
• Your mortgage
• Your rent
• Changes to your home, such as wheelchair access

The conditions and illnesses covered can vary significantly between different insurers. For illnesses like cancer, you will need to check which types of cancer are covered. The most comprehensive policies cover 50 different conditions or more, but others are much more limited.

Examples of critical illnesses that might be covered include:

• ✓Yes: Stroke
• ✓Yes: Heart attack
• ✓Yes: Certain types and stages of cancer
• ✓Yes: Conditions such as multiple sclerosis
• ✓Yes: Major organ transplant
• ✓Yes: Parkinson's disease
• ✓Yes: Alzheimer's disease
• ✓Yes: Traumatic head injury

Most policies will also consider permanent disabilities as a result of injury or illness.

Not all conditions are covered. Common exclusions include:

• ✗No: Non-invasive cancers
• ✗No: Hypertension, which is abnormally high blood pressure
• ✗No: Injuries such as broken bones

Some policies will make a smaller payment for less severe conditions, or if one of your children has one of the specified conditions. Critical illness insurance is typically taken out alongside other types of insurance, such as life insurance or income protection. It is often combined with a life insurance policy.

• Critical illness cover pays out if you get one of the specific medical conditions or injuries listed in the policy, and then the policy ends
• Income protection provides regular payments that replace part of your income if you are unable to work due to illness or an accident

See our guide to income protection or the insurance overview to compare.

Consider getting critical illness cover if:

• ✓Yes: You and your family depend heavily on your income
• ✓Yes: You do not have enough savings to tide you over if you become seriously ill or disabled
• ✓Yes: You do not have an employee benefits package to cover a longer time off work due to sickness

You might not need it if:

• ✗No: You have enough savings to cover ongoing expenses such as bills, rent or mortgage payments as well as the extra costs of a serious illness or disability
• ✗No: You already have some cover as part of your employer's employee benefits scheme

MoneyHelper says that if you are considered at risk of a particular condition, perhaps because of existing health issues, that illness could be excluded from the policy, or you might have to pay a higher premium. MoneyHelper says there are specialist brokers and insurers for people who have had insurance applications turned down, perhaps because of an existing medical condition.

When you make a claim, the insurer will check your medical history. If you did not answer truthfully or accurately in your application, or you did not disclose something, your claim might be rejected.

Monthly payments (premiums) can vary widely, depending on the policy and your circumstances. Cost is affected by your age, whether you smoke or have smoked, your health, your job and the level of cover. If you are considered at risk of a particular condition, perhaps because of existing health issues, that illness could be excluded from the policy, or you might have to pay a higher premium.

Reviewable premiums are usually reviewed after a certain period of time, usually every five years, and at each review point they are likely to increase in line with inflation. Guaranteed premiums remain fixed for as long as you have the policy. If you pay a bit extra to add a waiver of premium, your monthly premiums will be covered automatically if you can no longer work due to illness or injury. It usually kicks in only after you have been off sick for at least six months.

You have 30 days from buying the policy to change your mind and get a full refund. You can ask your insurer to cancel your policy at any time. There are usually no cancellation fees, but you will not receive a refund of any premiums you have already paid, and you will not be able to reinstate the policy once it is cancelled. If you are considering cancelling because of cost, contact your insurer and tell them you are struggling. Insurers must support customers in financial difficulty.

The best way to get what you need is to get advice from an independent financial adviser or specialist broker. They might charge a fee for their services, or they might be paid in commission by insurance companies. There are also specialist brokers and insurers for people who have had insurance applications turned down, perhaps because of an existing medical condition. MoneyHelper is a way to get clear, free, impartial help for all your money and pension choices. The Financial Conduct Authority's Financial Services Register lists all firms and individuals involved with regulated activities that it has currently or previously approved, and you can search it at register.fca.org.uk.

When you make a claim, the insurer will check your medical history. If you did not answer truthfully or accurately in your application, or you did not disclose something, your claim might be rejected. Under section 2 of the Consumer Insurance (Disclosure and Representations) Act 2012, it is the duty of the consumer to take reasonable care not to make a misrepresentation to the insurer. An insurer has a remedy against a consumer for a misrepresentation made before the contract was entered into only if the consumer made it in breach of that duty and the insurer shows that without it, it would not have entered into the contract at all, or would have done so only on different terms. A qualifying misrepresentation is either deliberate or reckless, or careless, and it is for the insurer to show that it was deliberate or reckless.