What Illnesses Are Covered by Critical Illness Insurance?

Critical illness cover helps provide some financial support, read our guide to what this type of policy will cover.

Critical illness cover is a popular add-on to a life insurance policy, and can also be purchased separately. In this article, we're going to be shedding some light on what illnesses are covered by a critical illness insurance policy.

It's important to know what is covered by your policy so that you and your loved ones can receive peace of mind that if the unexpected happens, you are covered financially. 💛

What is critical illness insurance?

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Critical illness cover is a type of life insurance that protects you and your loved ones from the financial impact of being diagnosed with a critical illness.

In the event of you being unable to work and provide financial support for those who are dependent on you, critical illness cover could pay out in a lump sum to support you and your loved ones.

If you'd like to know more, check out our article on what critical illness cover is.

What's the difference between critical illness cover and life insurance?

Critical illness cover and life insurance are not the same. Critical illness cover pays out whilst you are still alive, whilst life insurance usually pays out upon your death (unless you have been given 12 months to live and are cashing your policy out).

It's common for people to add critical illness cover on to their life insurance policy to ensure they are covered. Both types of policies could be worth considering (if you're wondering if you need life insurance insurance take a look here), especially if you have any dependents who rely on you financially. 💷

How does critical illness cover work?

Critical illness cover pays out a one-off tax-free lump sum if you are diagnosed with a critical illness listed within the terms of your policy. You pay premiums for the duration of your term and receive they pay out yourself, unlike a life insurance policy where your beneficiaries receive the pay out.

The critical illness cover policy pay out can be used in any way, such as paying household bills, mortgage payments, rent, medical bills.

What illnesses are covered by critical illness insurance?

Below are 30 conditions that are commonly covered by critical illness insurance. Be sure to check your policy terms as each insurance provider can vary in what they cover.

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The most common illnesses covered by critical illness cover are "the big three", these include:

Cancer

It's proven that 50% of those diagnosed with cancer live with the disease for 10 years or more. During this time, it's likely that you would have to take time off work, critical illness cover can make up for this loss of income.

Check your policy to know what types of cancer you are covered for. For example, most insurers cover cancer that has been diagnosed as malignant, but cancers that are in the early stages are unlikely to be covered by critical illness insurance.

If you have been diagnosed with cancer before, cancer will likely be excluded from your policy. This means that you won't be covered if you are diagnosed with cancer again within the term of your policy.

It's also important to note that critical illness cover also won't payout if you are diagnosed with terminal cancer. In this case, terminal illness cover comes in handy as it can provide you with an early life insurance payout if you have critical illness cover combined with your life insurance policy.

Heart attack

After suffering from a heart attack, you may need cardiac rehabilitation which might require you to take some time off work. Having critical illness cover can help cover you and your family's everyday costs during this time.

Stroke

It's proven that people of working age are 3x more likely to be out of work 8 years after having a stroke. Most strokes are completely unpredictable, making it evident how useful having a critical illness policy could be.

What isn’t covered by critical illness insurance?

Some policies may only provide you with a payout when your illness hits a certain level of severity. There are a few things to know that aren't covered by critical illness cover. You need to read through your policy documents to ensure you know what you are covered for and what you aren't. Here are a few common things not covered. 🚫

  • With a single policy, if you pass away, your cover will end
  • With a joint life policy, after the first person passes away and makes a claim, the policy can continue
  • If you pass away within 14 days of diagnosis of one of the illness they cover
  • If you stop paying your monthly premiums, your cover will end
  • If you're diagnosed with an illness or have a procedure that's not listed
  • Suicide is not included in the list covered

How much cover do you need?

Deciding how much cover you need is dependent on your personal circumstances. You should look at what your current expenses are such as any remaining mortgage debt, childcare costs, rent, bills etc. This will help you work out what level of critical illness cover you need.

How much does critical illness insurance cost?

The cost of a critical illness policy is different for each individual. The price depends on your medical details, which you must provide truthful information about upon making your application.

If you are in good health, it should be simple to get a quote on how much you'll pay for critical illness cover.

Your age, lifestyle, family health, as well as how long and how much cover you want to take out will also impact the cost of your critical illness policy.

When does critical illness insurance pay out?

Once you are diagnosed with one of the listed critical illnesses on your policy, you should contact your insurance provider straight away. They will walk you through the process and advise you on how long the payout will take, as each insurer is different.

Once you have successfully made an insurance claim, the payout is made in the form of a single lump sum usually within 8 weeks of a successful claim. 👍

Will my critical illness payout be taxed?

As the payout received from a critical illness policy is not classed as income, your payout will not be liable for income tax.

However, if you have a combined life insurance and critical illness policy, and make a claim but pass away before receiving the payout, it then becomes part of your estate. If your estate is valued at more than £325,000, your payout may be liable to inheritance tax.

If you were to write your policy in a trust, it is classed as being outside of your estate, meaning it won't be liable to inheritance tax. Feel free to chat with our partner James at JPEP if you have questions and he would be happy to help. 💬

Can you get cover after suffering from an illness?

If you have pre-existing medical conditions, you must tell the truth when making your critical illness application. If it is found out that you weren't entirely honest, your policy could become void and you will not get your money back.

However, just because you have suffered from an illness in the past, it doesn't mean that you won't be able to get cover. It may come at a higher price as you are at more risk or, depending on the illness, you may not be able to get coverage.

FAQs

What is considered a critical illness?

Critical illnesses are usually long-term, serious conditions such as cancer, heart attack or stroke, multiple sclerosis and Parkinson's disease. Each insurer will have their own personal list of what is considered and what is covered.

Is it worth having critical illness cover?

It's completely dependant on your personal circumstances. If you could afford to continue to pay your mortgage, your family's living costs, pay off debts and pay for carers upon being diagnosed with a critical illness, you might not need critical illness cover.

Is Covid classed as a critical illness?

Typically, COVID-19 is not listed as a critical illness on most policies. This is because most people who contract the illness recover. If you were to pass away as a result of Coronavirus, you would however, most likely receive a life insurance payout if you are covered.

How long does it take to settle a critical illness claim?

Each insurance provider works slightly differently, but critical illness cover should pay out within 8 weeks of making a successful claim. ⏱️

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FF Bequest Limited, trading as Bequest, is authorised and regulated by the Financial Conduct Authority with firm reference number 923791. You can check our authorisation on the FCA Financial Services Register by visiting the following website: register.fca.org.uk . We are registered in England and Wales, Registered office address: Founders Factory, Northcliffe House, London, United Kingdom, W8 5EH. Company Number 12367897.

Regulated by the Information Commissioner's Office (ICO) [ZA662891]. "Bequest" is trademark protected by FF Bequest Limited (UK00003452648). FF Bequest Limited is registered in England and Wales, No 12367897.

0203 916 5433

FF Bequest Limited, trading as Bequest, is authorised and regulated by the Financial Conduct Authority with firm reference number 923791. You can check our authorisation on the FCA Financial Services Register by visiting the following website: register.fca.org.uk . We are registered in England and Wales, Registered office address: Founders Factory, Northcliffe House, London, United Kingdom, W8 5EH. Company Number 12367897.

Regulated by the Information Commissioner's Office (ICO) [ZA662891]. "Bequest" is trademark protected by FF Bequest Limited (UK00003452648). FF Bequest Limited is registered in England and Wales, No 12367897.

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