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Critical Illness & Income Protection Insurance: What You Need to Know

When you’re looking to take out a new insurance policy, it can be tough to know exactly what’s best. There’s just so much on the market, and with more and more policies coming out every year, things can get confusing fast. That’s why we’ve devised this insider-look at Critical Illness and Income Protection Insurance, breaking down the differences and similarities between them, and hopefully helping you make up your mind as to what’s best for you and your circumstances.

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   Estimated reading time: 2 minutes

What might be the most obvious difference between Critical Illness Cover and Income Protection Insurance is their benefit amount; while Income Protection insurance provides a policyholder with a portion of their salary on a continuous monthly basis for as long as they’re signed off work or unemployed (up to 12 months), Critical Illness Cover pays out just one lump sum when you fall ill with one of the sicknesses covered (we’ll get to more on that later).

For some people, one lump sum is a better arrangement – maybe they have medical expenses or a mortgage to cover, for example, in which case this (usually considerable) payout might be more feasible for them. For others, though, longevity is more important than amount, and if you’re anticipating that you’ll be off work for quite a while, it might be that Income Protection’s monthly instalments are more suitable to your needs.

What’s covered under Income Protection Insurance?

A typical Income Protection Insurance policy will cover you for any time that you’re off work due to accident, sickness, or unemployment – which is why it’s sometimes referred to as ‘Accident, Sickness and Unemployment Insurance’. That means that if you have to take a leave of absence because you’ve become too sick or injured to work, or if you’re made involuntarily redundant, you don’t have to worry – you’ll be able to keep the lights on while you recover or search for a new job.

There are, of course, a few exclusions; for example, you won’t be able to get any cover for any pre-existing conditions (unless you’ve had no symptoms and haven’t received advice, treatment, medication, or consultation for this condition in the two years preceding your policy). This means that if you’re taken out of work because of an illness or injury you had before purchasing the policy, you’ll be in much the same boat that you would be without a policy. However, that doesn’t mean that this kind of policy doesn’t have its uses; if you’re taken out of work for any other condition, you’ll be covered as you should be.

Cosmetic surgeries, illnesses caused by drink/drugs, and injuries caused by self-harm also aren’t covered. You can get cover for mental health and spine & neck problems – though many people think you can’t! – but these become a bit complicated and have to be very thoroughly documented when they occur.

For more information, feel free to check out our website.

What’s covered under Critical Illness Cover?

Most Critical Illness Cover policies will cover you if you’re diagnosed with a critical illness meeting the insurer’s policy definition within the policy term, and you survive for 10 days. That can sound a bit scary at first, but that’s alright – the situation is understandably scary, and it’s unfortunately always better to be prepared for the worst-case scenario, just in case.

The specific illnesses covered by this kind of insurance differ from insurer to insurer, but typically include: cancer, stroke, heart attack, Parkinson’s disease, speech loss, organ failure, and multiple sclerosis, among others. You can, by and large, choose which illnesses you want covered; for more specifics, it might be worth getting a quote from us here.

When it comes to exclusions, the biggest one is – like Income Protection Insurance – pre-existing conditions, which are again only covered under certain circumstances; usually if you’ve been without treatment or symptoms for a certain period of time. If you’re diagnosed with an illness that’s not covered by your policy, you won’t be covered, which is why it’s important to be sure that you’re purchasing the policy that’s right for you.

If you’d like some help in selecting the policy that fits your needs best, why not talk to one of our advisors on 0330 330 9465?

Are there any age limitations to these policies?

There are often age limitations to both Critical Illness Cover and Income Protection Insurance, yes. For Income Protection, that usually means you’re covered up to the age of 65, and for Critical Illness, age limits can go up to 70.

How much do these policies cost?

Costs are usually dependent on the insurance provider, but they’re affected by various personal circumstances or requests you make. For example, the price – or ‘premium’ – of Critical Illness Cover is usually influenced by what illnesses or injuries you select to be covered as part of your policy. An Income Protection Insurance policy’s premium, on the other hand, is determined by the risk level inherent to your workplace; for example, a person employed in a high-risk environment like a construction site would likely be expected to pay a higher premium than someone in a low-risk environment like an office.

How do I know what’s best for me?

When it comes to selecting the insurance policy that’s right for you, it’s often a matter of finding what fits your specific circumstances. What might work for one person won’t necessarily work for you.

If you’re more concerned about getting a specific and severe illness, or you think a single (but large!) lump sum benefit will be of more use to you, you might be better off thinking about Critical Illness Cover.

In the inverse, if you’re more worried about general or less severe illnesses, or you’re kept up at night about the possibility of involuntary redundancy, then you might want to select an Income Protection Insurance policy instead. Rather than one lump sum, this will pay you on a monthly basis, so if you’re worried about being off work for a while, this might be the best idea.

What’s most important is getting covered for what you need, so if you’re still not sure, check out our online quote service or call to speak to an advisor on 0330 330 9465.