Jamie Lennox - Mortgage Adviser - Dimora Marketing

Do I need critical illness Insurance?

Critical illness insurance

Do I need critical illness insurance?

Do I need critical illness insurance when buying a home or if I have a family is often a common question asked. However, in reality, critical illness could be that peace of mind insurance that everyone should at least consider exploring.

What is critical illness insurance?

Critical illness insurance is a type of cover that offers protection should you develop a serious illness unexpectedly.

Critical illness insurance is likely to be helpful if you don’t have enough money saved to fall back on in the event that you fall ill unexpectedly, or if your employer doesn’t offer an employment benefits package to cover periods of unemployment due to sickness.

Critical illness cover will then pay out a tax-free lump sum which you can spend however you like, for things like clearing debt, covering additional costs incurred for treatment, supplementing the loss of income in the household, or even adapting your home to meet your needs.

Is Critical illness insurance worth it?

Determining “Do I need critical illness” and is worth it depends on your personal circumstances, lifestyle, and financial situation. If your employer does not provide benefits that offer financial assistance in the event of a serious illness during your employment, critical illness cover may be worth considering as it can provide peace of mind. However, it’s important to carefully consider the pros and cons before making a decision:


1. Peace of mind without substantial savings: Critical illness cover can provide reassurance if you do not have significant savings. In the event of an unexpected serious illness, the payout can serve as a source of income for you and your family.

2. Settling outstanding payments: If you become critically ill and are unable to work, the payout from critical illness cover can help settle outstanding payments such as your mortgage or loans.

3. Dependents’ financial security: Having critical illness cover can offer peace of mind if you have dependents, such as children or other family members, who rely on you financially.


1. Limited coverage: It is important to check which illnesses are covered by your insurance provider. Even if your illness is listed, the coverage may depend on its severity.

2. Costly premiums based on lifestyle: The cost of critical illness insurance can vary depending on your lifestyle and health. Premiums tend to increase as you get older, as the likelihood of making a claim rises.

3. Existing employee benefits package: If you already have an employee benefits package that provides compensation in the event of a serious illness during your employment, you may not need additional critical illness cover.

Determining the cost of critical illness insurance:

The cost of critical illness insurance depends on the payout amount specified in your policy, as well as factors such as your health and lifestyle choices. As you age and your health deteriorates, the likelihood of making a claim increases. It is essential to ensure that you can afford the premiums from the start, as critical illness policies cease to provide cover if you stop paying the premiums. Additionally, it is important to note that there is no cash-in value for critical illness cover if you do not use it. If you survive until the end of the policy term or decide to stop the policy prematurely, you will not receive any money back.

To reduce the cost of critical illness, lifestyle changes can be made. For example, losing weight and quitting smoking can demonstrate to insurers that you are adopting healthy habits, thereby reducing the chances of making a claim.

Critical illness

Exclusions and Coverage:

Critical illness policies do not cover all types of illnesses but focus on more severe conditions that prevent you from working and earning an income. Certain conditions may be excluded based on a family history of the illness or if they arise from undisclosed pre-existing conditions. It is crucial to review the policy terms to understand the list of conditions covered as the definition can vary significantly from one insurer to another. If in doubt always seek advice for an expert that specialises in this field to guide you accordingly.

Determining the required insurance:

To calculate the amount of critical illness insurance you need, consider the expenses you would have to cover if you were to become seriously ill and could no longer work. Factors to consider include:

1. Mortgage or rent payments: Determine the remaining amount on your mortgage or estimate the total rent payments over time.

2. Household bills: Include costs such as gas and electricity, council tax, car insurance, and water bills.

3. Debts: Consider any outstanding loans or credit card payments, including payments for vacations or financed vehicles.

4. Childcare and family commitments: Factor in the financial support needed for your children and family if you were unable to work due to illness.

5. Medical expenses: Account for potential expenses related to modifying your home for your needs or travel to hospitals for medical treatment.

After calculating the required coverage, assess whether you have any savings that could lower the cost of your cover

or if you are eligible for state benefits that can provide additional support.

Disclosure to Insurer:

Before obtaining critical illness insurance, it is essential to disclose your own and your family’s medical history to the insurer. Failure to provide accurate information about prior or existing medical conditions that are later linked to a critical illness claim can invalidate your cover, resulting in no payout. While declaring pre-existing conditions may still allow you to obtain cover, it may result in higher premiums. It is important to note that you do not have to discuss sensitive medical information with an insurance salesperson, as you can directly communicate it to the company’s medical officer.

Covered Conditions:

The specific conditions covered by critical illness insurance will vary among providers. It is crucial to carefully review the policy details to understand the exact coverage you will receive. Generally, critical illness insurance focuses on major conditions such as cancer, heart attacks, and strokes. However, other conditions like kidney failure, major organ transplants, and multiple sclerosis may also be covered. Some insurance companies include more than 60 ailments, conditions, and injuries. It is important to note that even if your illness is on the list, the payout may depend on the severity or permanence of the condition. Certain forms of easily treatable cancer or mild strokes and heart attacks may be excluded based on their severity.

Difference Between Life Insurance and Critical Illness Cover:

Life insurance pays out to your designated beneficiary when you pass away, providing a lump sum that can be used for various purposes, such as income replacement, mortgage payments, or funeral expenses. On the other hand, critical illness cover pays a specified amount if you are diagnosed with a serious illness. Both types of insurance can be obtained separately or together. Some insurers offer critical illness cover as an add-on to a life insurance policy, while others include it as a standard feature.

Difference Between Income Protection Insurance and Critical Illness Cover:

Income protection insurance and critical illness cover serve as financial protection when you cannot work due to illness or injury, but they operate differently:

1. Critical illness cover: This type of insurance provides a lump sum payout if you are diagnosed with a critical illness specified in the policy. The focus is on serious illnesses that may have a significant impact on your long-term health.

2. Income protection insurance: Unlike critical illness cover, income protection insurance covers a wider range of accidents and illnesses that may prevent you from working for a certain period. It typically pays out a monthly benefit that covers a portion of your salary during the period of incapacity.

income protection

Types of Critical Illness Cover Available:

When obtaining critical illness insurance, there are two common options:

1. Additional cover: You can purchase life insurance and critical illness cover as separate policies. This means you will receive a payout if you experience a critical illness or if you pass away during the term of the policies.

2. Combined policy: Some insurers offer a combined policy where you will only receive one payout either for a critical illness or in the event of your death during the policy term.

It’s important to consider your needs and preferences when choosing between these options.

Compare Critical Illness Cover:

If you are considering critical illness insurance you may want to seek advice from an advisor who can inform you accordingly and put a plan in place for your needs. The sad reality is you get one chance to get your insurance right and a decision on what cover taken should be rushed. By providing information about yourself, your lifestyle, and the desired payout, your adviser can obtain a quote for your circumstances and needs.

Remember that quality critical illness cover provides protection against unexpected events, offering confidence in your future and allowing you to enjoy life with greater peace of mind. As each policy can vary on the conditions that will cover, it’s important to make sure the policy meets the minimum standard for critical illness cover.

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