Critical illness cover, also referred to as critical illness insurance or CIC insurance, is a form of insurance that pays out a lump-sum to the policyholder should they be diagnosed with an illness or suffer an injury that is covered by the policies terms.

Critical Illness Insurance Pro's and Cons

What is Critical Illness Cover

Critical illness cover is often confused with life insurance. Whilst they are frequently sold together, they are two distinct insurance products that protect against different eventualities.

Life insurance pays out when the policyholder dies or is diagnosed with a terminal condition and has a 12-month life expectancy or less.

Critical illness cover insures against serious illness or injury that could have a life-changing impact on the policyholder. Policies vary, with different conditions being covered; therefore, it’s important to review the policy details before proceeding. Some examples of commonly included conditions are;

  • Some Types of Cancer
  • Heart Attacks/Strokes
  • Loss of Sight
  • Organ Transplants
  • Lung Disease
  • Loss of Speech
  • Deafness
  • Multiple Sclerosis

The Advantages of Critical Illness Cover

All types of insurance have their pro’s and con’s, and critical illness cover is no different. However, all insurance policies should be looked at from an individual perspective. Each case is different, and a policy that’s not suitable for one person may be perfect for another.

The key advantages of critical illness insurance include:

  • The policyholder receives a lump sum payment if they are diagnosed with a condition detailed by the policy
  • The payment is tax-free
  • There are no restrictions on how the money can be used. It can help pay regular monthly expenses such as mortgage, rent or utilities. It can be used to pay for medical treatment. Or it could go towards home alternations to accommodate a change in circumstances
  • Most common illnesses are covered; however, as we’ve mentioned above, you need to check the policy details
  • Critical illness cover is very flexible. The policyholder can often choose the level of cover and the conditions included
  • Unlike life insurance, the policyholder benefits directly as the pay-out is made while the holder is still alive
  • It provides peace of mind that should you be unable to work due to a serious illness or injury, you will still be financially secure and won’t have to worry about paying bills

The Disadvantages of Critical Illness Cover

Critical illness cover is not perfect, and it won’t suit every individual and every set of circumstances.

Some points to keep in mind when looking for a policy are;

  • Some policies have age restrictions and won’t accept individuals over 74 years old. You may also find term restrictions of 50 years which means that the policy would terminate after it’s been in place for 50 years
  • Some conditions aren’t covered, and the severity level of a condition needed to trigger a pay-out may differ from policy to policy
  • Pre-existing health conditions may be excluded
  • Premiums for some polices can be high

Do You Need Critical Illness Cover

Whether you need critical illness cover will depend on your own personal circumstances. If you were unable to work due to serious illness or injury, would you be able to meet your financial obligations, such as mortgage payments, rent and utility bills? Government support is available, but this is generally much lower than most people’s wages and would mean you’d need to make significant lifestyle changes should you have to rely on it.

Getting Expert Advice

The insurance market can be tricky to navigate. With so many different insurance types and hundreds of providers, it helps to engage with an expert who can offer you reliable and trustworthy advice.

Elementary Mortgage Solutions have a team of experts who can guide you through the different types of insurance available. Please get in touch with our team today, and we’ll be happy to arrange a free consultation to assess your requirements.


The content of this post was accurate at the point of publication and is subject to change.