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Critical Illness Cover

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Have you considered how you would manage financially if you were to become critically ill? Critical Illness Cover is cover against the unforeseen events that life can throw at you. If you have critical illness cover in place, it will pay out a lump sum if you become seriously ill or have an injury which stops you from working.

Taking out a critical illness policy is an extra cost to pay monthly on top of your life insurance and other outgoings, but it is incredibly helpful to have if you do unfortunately need to use it.

The financial impact that developing a critical illness or suffering an injury can have on your family could add extra stress that you do not need when unwell. At The Insurance Surgery, we are experts in helping you find life cover and critical illness cover to give you peace of mind that your family will be taken care of if you cannot provide for them. We search the top UK providers to find the best cover for you.

Critical Illness Cover

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Critical Illness Cover is one of those products that most people think that they either can’t afford or will never need. Unfortunately, the reality is that we are far more likely to claim on a Critical Illness Cover policy than we are on a Life Insurance policy.

Critical illness cover protects you against many serious illnesses. A policy can be taken out alongside life insurance cover, or it can be bought on its own. It is similar to serious illness cover and our expert advisors can look at your circumstances and discuss your options with you.

If you need to claim against it, it pays out a tax-free lump sum or an income when you need it most.

Some policies can also pay out if your children get seriously ill and you need to take time off work to care for them. If your child is diagnosed with a serious or critical illness, it can help you financially.

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Why taking expert advice is important

Different policies cover different illnesses. At The Insurance Surgery, we can help you choose the best policy to cover what matters the most. It is important to make sure that you are covered properly when you or your family needs support.

You get what you pay for when it comes to critical illness cover and the cheapest or most expensive option isn’t necessarily the best option for you. Our advisors will discuss your personal circumstances in depth with you to make sure we find you the cover you need. We will take into account your family, occupation and lifestyle to make sure you have the best cover possible if anything did prevent you from working.

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What is Critical Illness Cover?

A Critical Illness Cover policy pays out a Tax-Free lump sum if you are diagnosed with a critical illness defined under your policy wording. Some Critical Illness Cover policies vary in terms of the conditions that they will cover and the amount they will pay out in the event of a claim.

It is very important to check your policy wording to make sure that the policy is right for you. Our expert advisors will help to explain how it works and will always make sure you have the best policy for your circumstances.

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What is covered by a Critical Illness Cover policy?

Critical Illness Cover offers additional protection to Life Insurance and will pay out if you were diagnosed with a serious or critical illness, which is defined under your policy wording. Most policies will also provide cover if you were involved in an accident and suffered an injury, illness or become permanently disabled.

The majority of Critical Illness Cover policies will provide cover against:

Most Cancers

Multiple Sclerosis

Heart Attack

Kidney or Liver Failure


Major Organ Transplant

Plans can cover many more medical conditions, as well as provide cover tailored to your kids.

Unfortunately, there are a huge number of illnesses and disabilities that can affect us at any point in life. Critical Illness Insurance cannot cover absolutely everything but what you are covered for will be outlined in your policy.

You might come across a policy that will cover ten or twenty main illnesses whereas other policies may cover 100s. That is why it’s good to use a specialised broker like The Insurance Surgery to find you the policy that is best for you.

It can be incredibly confusing when you are searching for life insurance or critical illness cover, as you don’t necessarily know what is the best deal for your circumstances.

The Insurance Surgery does all the hard work for you and compares the policies to find you the one that suits your lifestyle and budget.

Some people think that it may make sense to opt for the most expensive cover, as that would cover you for any outcome. This would come down to your own personal budget and whether you can stretch to the most expensive cover available to you. It is important to note that you may only be able to claim on some illnesses if they are in the advanced stages or if they will result in permanent symptoms.

We will always check these specifics with the insurance providers so you know exactly what is in your policy. You can often personalise your cover and add extra specific illnesses to the policy if it is something that you are particularly worried about.

You will need to give your advisor details about your medical history, and sometimes about your family history too. If you have a certain medical condition that runs in the family, you may be deemed high risk. The insurance provider will determine how high risk you are and whether they can cover you or not.

It might be tempting to leave out minor details of your medical history as you can often find that this will increase your premium a little. However, it is very important that you are honest throughout your application process. Your insurer could void any future claims if they find out that the information on your application isn’t 100% accurate.

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What does Critical Illness Cover do?

A Critical Illness Cover policy is designed to add an extra level of cover over and above your standard Life Insurance policy. This is to cover you if you were to become ill or injured. Your Critical Illness Cover policy will pay out a Tax-Free lump sum to cover:

Hospital Fees / Medical Treatment

Adapting your home

Cost of Living Expenses

Mortgage / Rental Payments

A Critical Illness Cover policy will provide you with peace of mind if you were unable to work due to sickness or injury. Critical Illness Cover can make a huge difference to your recovery and to help you to get back to work as quickly and comfortably as possible.

Having this safety net means you don’t have to worry about money and can focus on yourself and your family whilst you get over your illness or accident.

How much does Critical Illness Cover cost?

The cost of Critical Illness Cover will vary depending on a number of factors. Everyone has different circumstances so we take all of your details into consideration when we apply for a critical illness policy for you. Some details that you can expect to be asked include:


Current Health

Your Weight

Medical History

Family History

Smoker Status

Sum Assured / Term

The Amount Of Cover You Want To Take Out


You are asked about your job because some occupations carry a higher risk than others. This may mean that you are asked to pay a higher premium each month compared to someone who may have an office or home-based job.

It is possible to adapt your Critical Illness Cover policy to make it affordable for you. The level of cover needs to be appropriate for your circumstances, but you can cut back if the premiums are slightly out of reach. Our team of expert advisers will discuss the various options with you and can provide several quotes to give you the best level of cover to fit your budget.

There are some things that you can do to reduce your critical illness cover premiums if they are exceptionally high. It will mainly come down to trying to live a healthier lifestyle than you are doing currently.

Some lifestyle changes you may want to take are reducing your BMI or quitting smoking. Both of these things will see a reduction to your monthly costs. You may also want to look at adjusting the sum assured to reduce the monthly premium.

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How does Critical Illness Cover work?

Taking out a critical illness policy may seem slightly daunting if you are not sure how it works. We can find you the best policy to suit you and your budget,.

With Critical Illness Cover, you decide on the length of the policy. Many people choose to have cover until their children have left home and are no longer financially dependable on them.

Others decide to get critical illness cover until they have paid off their mortgage, so they know that if anything were to happen, they could continue with the payments and keep a roof over their head.

Some people decide to take out critical illness cover for the rest of their working years. Once they have retired and have their pension, there may not be any need to have the critical illness cover any more, as they are no longer working anyway.

Critical Illness cover is very much like car insurance or home insurance. It is a monthly payment that you pay to give you peace of mind. You hope that you will never need to use it, but if the worst was to happen, it will cover your costs.

You claim on your critical illness cover when you are diagnosed with an illness or have an accident which means you cannot work for a period of time.

When you claim on Critical Illness Insurance, you’ll receive a lump sum payment. The payment is to help you with your financial commitments whilst you are unable to earn a living or work in the role that you are trained in.

One of the first things to do when setting up your cover is to consider whether you want to take out level, increasing or decreasing cover.

Increasing cover

With increasing cover, the amount of cover that you can claim and the amount that you pay monthly both go up year on year. This is in order to protect against inflation. This is a good option for people with families who want to make sure that their salary and living costs will be covered by their pay out.

Decreasing cover

The value of decreasing cover goes down each month but what you pay stays the same. If you want your pay out to cover any loans or debts that you pay off monthly such as a mortgage, then decreasing cover would suit you. It would mean that your payments stay at a rate that you are happy with throughout the whole term of your cover.

When does Critical Illness Cover pay out?

Critical illness cover pays out when you have been diagnosed with an illness or suffer from an accident which means you can no longer work.

If you’re unfortunate enough to need to make a claim, the insurer will assess your situation. Assuming your diagnosis meets the terms and conditions of your policy, they will pay out the money directly to you.

All of the details will be in your policy paperwork so keep this safe just in case you ever need to make a claim. It is very important to give accurate information during the application process so that you will not have any issues when it comes to claiming. If you have lied about certain medical conditions or aspects of your lifestyle, your insurance company will likely refuse to pay out.

How long should my policy last?

Most policies will end once you’ve made a claim.

Hopefully you won’t ever need to claim on a critical illness policy, and a lot of people do not, however they still take it out just in case. If you do not need to claim on it, you can keep your policy going right up until your mortgage has been paid off or your children have flown the nest.

People don’t tend to need the cover once the mortgage has been paid off, as they no longer have to worry about those payments if they were to be ill or injured. When someone retires, they also tend to cancel the policy as they are no longer working any more anyway.

Other people wait until their children have grown up and no longer depend on them.

It’s worth noting that Critical Illness Insurance does not usually pay out if you pass away. If you are looking to make sure your family is provided for when you are no longer around, a life insurance policy is a good idea.

We are specialists in life insurance, whether you have a medical condition, dangerous occupation or a hazardous hobby. We can find you a policy to suit your needs within a budget that is affordable for you. You can combine a life insurance policy with critical illness cover so that you are covered for all eventualities.

Illness or injury could happen to any of us at any time. If you have a family and financial responsibilities, then Critical Illness Insurance should be on your radar.

The team here at The Insurance Surgery are always here to discuss your options and answer any questions you may have, no matter how big or small. We are experts in our field and can find you a policy that you are happy with without you having to compare prices across the internet.

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When should I buy Critical Illness Cover?

The same rule applies for Critical Illness Cover as for Life Insurance. The younger you are when you take out a critical illness policy, the cheaper it will be. However, there is never an ideal time to take out any cover – the sooner, the better!

Later in life, premiums tend to be higher and full cover may not be as affordable. There may also be extra loadings on a premium if you are over a certain age.

If you have been diagnosed with a pre-existing medical condition and need Critical Illness Cover, then you may find it more difficult to obtain this type of policy. Critical Illness Cover is underwritten at the point of application and premiums / cover will depend on what your pre-existing condition is and the severity of that condition.

If you do have a medical condition, it is important to disclose all of the information regarding the condition so that we can ensure you are covered. Some policies may allow you to have cover with certain exclusions. This would mean that if you cannot work due to that specific condition, you may not get the pay out you need.

Do you pay tax on Critical Illness Insurance pay outs?

One of the great things about critical illness insurance is that the funds you receive upon claiming are not taxable. This will give you that extra support when you need it the most.

Payments from a critical illness policy are not classed as income. You will not have to pay any income tax on the money that you received from your insurance provider.

However, if you take out a joint life insurance and critical illness policy and make a claim, but do not receive the money before passing away, the pay-out becomes part of your estate. Therefore, your loved ones could face a potential inheritance tax bill.

If your estate is valued at more than £325,000, inheritance tax will be charged on the insurance pay-out. The only way to get around this is if you write your insurance policy in trust. This is when your policy is classed as being outside of your estate.

When taking out a policy with The Insurance Surgery, you will be assigned a designated advisor who will be able to talk you through the whole process. If this is something you are concerned about, they can ensure the policy you take out has this written into it.

If you make a claim on your critical illness cover for an illness or injury, tax is something you do not have to worry about.

If you do fall ill, state benefits are unlikely to stretch far for you. You may only receive around £100 per week, so it is worth taking out critical illness cover. It is also worth considering if your employer does not offer much help for employees who develop long-term health issues.

How does Critical Illness Cover differ from Terminal Illness Cover?

Terminal illness cover pays out when you are diagnosed with a terminal illness rather than when you cannot work or you pass away. This is what makes it different to critical illness cover or life insurance.

Critical illness cover protects you if you are diagnosed with a critical, but not necessarily fatal, illness during the length of your protection.

If you are diagnosed with an illness or have an accident, your critical illness cover will pay out in the time you have to have off work. It will be a lump sum so will not pay out monthly and you can go back to work at any point after receiving it.

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What’s the difference between Critical Illness Cover and Income Protection?

These products often get confused as they both pay out in the event of illness, just in different ways. Whilst critical illness cover provides a lump sum when you are diagnosed with a covered illness, income protection insurance provides a regular portion of your income if you are unable to work. It will continue to pay out regularly until you pass away, retire, or are fit to return to work.

This could be a better option to have if you are diagnosed with a long-term illness where you will need treatment for a significant amount of time. It is worth thinking about your lifestyle and outgoings if you are wanting to choose between the two.

You are more likely to claim against income protection insurance. It pays out a monthly income during the period that you are unable to work. It is likely to pay out a lower amount if you were to successfully claim on a critical illness policy.

Critical illness cover pays out an immediate cash sum and is paid out in full when you claim. There is nothing stopping you returning to work afterwards and still having some of that lump sum left over. The income protection claim would only pay out for the period that you are unable to work.

It is difficult to compare the two policies side by side as they are a very different type of cover. Usually, at standard rates, critical illness cover may be slightly more expensive on a monthly basis. Both types of cover are equally as important, so if your budget stretches to it, it is worth taking out both. However, if you need to choose between the two, our expert team can help.

As an independent broker, we can give you the impartial advice that you need to make the best decision for you, your family and your personal circumstances. We can explain all of your policy options and help you choose the best one for you, as well as helping with your applications and chasing the insurance companies for prices on your behalf.

What about Critical Illness Cover for smokers?

Due to the increased health risks for smokers, Critical Illness Cover premiums will always be higher for smokers than for non-smokers. Insurance providers work on risk and therefore your premiums for Critical Illness Cover as a smoker are calculated based on how likely you will be to claim on your policy. Every insurance provider has a different criteria, so we can help look at the different options you may have.

If you have recently given up smoking or are thinking about giving up smoking, then you will need to be nicotine free for 12 months before you will be classed as a non-smoker. In recent years, the development of nicotine replacement products has also meant that terms have changed to include products such as:

Nicotine Patches

Nicotine Gum

Vapour Cigarettes

Use of any of these or any other nicotine replacement product will also mean that you would still be classed as a smoker by insurers for Critical Illness Cover. If you need help to quit smoking, your GP can offer you advice and solutions to be able to quit for good. Nicotine replacements are a great way of weaning yourself off cigarettes. Unfortunately, you’re still not classed as a non-smoker until you stop using those for a year too.

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Income Protection

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The product is designed to pay up to 70% of a working individual’s annual pre-tax income as a monthly benefit (tax free) should they be off work due to an unexpected or sudden illness or injury.

With an Income Protection policy in place, you are not restricted on what type of illnesses or injuries you can claim on. You can claim as many times as you want throughout the policy term, with short and long-term options are available starting from 1yr, 2yrs, 5yrs or full cover which usually insures you up to retirement age.


Mortgage Life Insurance

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If you’re looking for insurance that is specifically designed to cover your mortgage payments, then we suggest considering Mortgage Life Insurance Cover.

Mortgage Life Insurance Cover is put in place to ensure your outstanding mortgage is paid off in the event of death, giving your loved ones one less thing to worry about.

To ensure you are properly covered, you simply need to tell us how much is left to pay on your mortgage and over what term. That is the exact amount of cover and term length you will need to take out.

This type of life insurance is what is referred to as a ‘Decreasing Term policy’ – as the amount paid out decreases over time to keep in line with your outstanding mortgage balance.

Mortgage Life Insurance can be added onto your Critical Illness Cover.


Renters Income Protection Cover

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Renters Income Protection Cover is ideal for those currently renting in the private rental sector in the UK. It has been designed to offer protection for a large percentage of people who would not be able to protect their income should they find themselves unable to work.

It works through paying out a monthly benefit to people who find themselves unable to work due to an unforeseen illness or accident. It can be used to cover the cost of rent, or it can be put towards other living expenses such as utilities, medical bills, and childcare.