Is critical illness cover worth it?

Critical illness cover is a type of insurance that pays out a tax-free lump sum if you're diagnosed with, or undergo surgery for, a critical illness that meets the policy definition during the policy term. These products are designed to help support you and your family financially while you deal with your diagnosis - so you can focus on your recovery without worrying about how the bills will be paid.

Our Critical Illness Plan pays out provided that the policyholder is a UK resident, is aged between 18 and 64, that their critical illness meets our policy definition and that they have survived at least 10 days post-diagnosis. There is no cash-in value at any time. The full cover amount will only be paid out once. Also, if payments stop, the policy will end. 

It’s a question we may ask ourselves when  weighing up whether to commit to another monthly bill. And the answer really depends on your personal circumstances.

Being ill or injured isn’t something we tend to think about until it happens. Along with the health worries it might bring, it could also put your working life - and your earnings - on hold at the same time.

That's when critical illness cover could benefit you, by helping you keep paying the bills. This is especially helpful if you don't have savings and your place of employment doesn't give you benefits for long-term sick leave.

Before you decide if it’s worth the extra outlay each month, it could be helpful to jot down the expenses in your life you'd need to cover if you stopped earning. We've noted some of the main ones below, along with the reasons why critical illness cover might not make sense for you.

Benefits of critical illness cover

• Money for living costs: If you don’t have savings and become seriously ill unexpectedly, your critical illness cover payout could help towards expenses such as your monthly household bills and childcare costs.
• Paying outstanding loans: You might be able to take a payment holiday on your mortgage or other loans, but it won’t last forever, and this is where your payout could replace lost earnings.
• Money to adapt your house: Making changes to your home to help make living with your condition easier can be expensive. No one plans for unexpected costs like this and so a critical illness cover payout could make the difference.
• Tax free payout: As there is no tax involved, you'll receive the full lump sum.
• Your children are covered too: Most policies include cover for your children as well. Ours can cover your kids from when they're 30 days old up until their 18th birthday  (or 21st birthday if they're in full-time education), where we’ll pay up to £25,000 or 50% of the cover amount, whichever is lower.

Disadvantages of critical illness cover

• Your illness might not be covered: While most major conditions are covered, some are not covered. It's important you understand what is and isn't included.
  
• You may not be covered for pre-existing conditions: If you’ve been treated for cancer, you might not be covered for the same or for all types of cancer. You also might have to pay higher premiums.
• Cover depends on the severity of the illness, so you’d need to check the full definition in your policy document before making a claim. 
• Premiums can be expensive: The cost of critical illness cover depends on your age, smoker status and health. The cost of cover increases the older you are when you take out the cover.
• There's no cash-in value at any time: Critical illness cover will only pay out if you're diagnosed with certain serious illnesses during the lifetime of the policy. If you pass away, then the policy ends and there will be no pay out.
• You may already have cover through your employment: If you have an employee benefits package through your employment, you may be entitled to a financial payout if you become seriously ill during your employment.

It all depends on your age, personal circumstances, and medical history. Over half of our customers pay just £19 or less a month for our critical illness cover. This is according to figures from June 2023 to June 2024.