The difference between life insurance and critical illness cover

When someone takes out life insurance and dies during the duration of the policy, their chosen beneficiaries will receive a lump sum. This can protect against a loss of income, the taking on of debts such as a mortgage or any other costs. Critical illness cover can help with similar financial issues, but comes into effect if the policy holder is diagnosed with an illness from a list of critical illness conditions. Both are worth considering if you have any dependants who rely on you financially.

Frequently asked questions

If you are diagnosed with an illness that's listed in the conditions covered by your critical illness cover, and which meets the definitions, then your insurance provider will pay out a tax free lump sum. Typically, the policy will then end once the payout is made. If you pass away after the payout, no more is paid out.

The primary difference between critical illness cover and income protection is in the payout. Critical illness cover is designed to help you cope financially if diagnosed with a critical illness specified in your policy, by providing a one-off lump sum. Income protection pays a percentage of the policy holder's income each month if they are unable to work. The percentage of income and the length it pays out for are agreed at the outset.

Critical illness cover payout is not considered an income by the UK government, so the pay-out will not be subject to income tax.

Yes you can get life insurance and critical illness together. Many insurance providers offer critical illness cover as an option to their life insurance product. It's important to remember that your critical illness cover will only pay out if you have an illness that is listed as one of the critical illnesses on your policy and which meets the definition.

Critical illness cover and life insurance serve different purposes. Critical illness cover pays out a lump sum upon diagnosis of a health condition defined within the terms of the policy, while life insurance pays out if the policy holder dies within its duration.

If you are diagnosed with an illness that's listed in the conditions covered by your critical illness cover, and which meets the definitions, then your insurance provider will pay out a tax free lump sum. Typically, the policy will then end once the payout is made. If you pass away after the payout, no more is paid out.

The primary difference between critical illness cover and income protection is in the payout. Critical illness cover is designed to help you cope financially if diagnosed with a critical illness specified in your policy, by providing a one-off lump sum. Income protection pays a percentage of the policy holder's income each month if they are unable to work. The percentage of income and the length it pays out for are agreed at the outset.

Critical illness cover payout is not considered an income by the UK government, so the pay-out will not be subject to income tax.

Yes you can get life insurance and critical illness together. Many insurance providers offer critical illness cover as an option to their life insurance product. It's important to remember that your critical illness cover will only pay out if you have an illness that is listed as one of the critical illnesses on your policy and which meets the definition.

Critical illness cover and life insurance serve different purposes. Critical illness cover pays out a lump sum upon diagnosis of a health condition defined within the terms of the policy, while life insurance pays out if the policy holder dies within its duration.

More on life insurance and critical illness cover