Critical illness cover or critical illness insurance as it is also known is a long term insurance policy that undertakes to pay a one-time lump sum in the event that you are diagnosed with a serious illness or incapacitated (perhaps even temporarily) by a serious illness or injury.

This payment is a one-off lump sum and might go towards improvements to your home (in the case of immobility following an illness or accident) or to cover other living costs. It is not an ongoing payment.

Critical illness insurance usually pays out in the event that you suffer from one of a variety of serious conditions including heart attack, stroke, certain types and stages of cancer, multiple sclerosis, etc or injury. Some illnesses are unlikely to be covered, including certain types of cancer and illnesses you knew you already suffered from at the beginning of the policy. Each policy will detail what is and what is not covered.

The cost of taking out critical illness is, unsurprisingly, linked to the risk the insurer perceives that you present. A clean living, non-smoking, 23 year old, married woman with no history of illness and a habit of regularly visiting the gym and regularly participating in games of badminton is going to pay far less in premium than an overweight, sedentary, 50 year old man with a family history of heart disease, a 20-a-day smoking habit and a liking for beer festivals and skydiving at weekends!

Of course, that clean living, 23 year old might well be thinking ‘so why do I need to insure against the unlikely’?

The fact is that every year 1 million workers in the UK unexpectedly find themselves unable to work because of injury or illness (Source: Association of British Insurers). Losing the ability to work, even for a short time, can have a dramatic effect on one’s life, let alone the onset of a chronic, lifetime illness. Bills still need to be paid and unless you have substantial savings or a partner that can keep the wolf from the door whilst you are recovering, you should seriously consider critical illness cover as part of your risk management plan.

Other insurances worth considering, dependent on your circumstances, might include life insurance (particularly when you have dependents), income or payment protection insurance policies or a short term income protection policy and also Accident Sickness & Unemployment (ASU) cover.

For more information see our protection page or speak to an adviser on 01628 507477.

Related articles: 

• What is Income Protection Insurance?

• What You Need to Know About Home Insurance

• The difference between Life Assurance and Life Insurance

• What is Accident, Sickness and Unemployment (ASU) Insurance?

• What is Home Insurance and What does it Cover?

• Do I need Insurance for a Mortgage?