Critical Illness Cover Pros And Cons

The majority of us can’t afford to live for sustained periods without a regular salary, so when misfortune comes knocking it is imperative to have a plan B.

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The majority of us can’t afford to live for sustained periods without a regular salary, so when misfortune comes knocking it is imperative to have a plan B.

For these situations, Critical Illness Cover can help, but it is important to understand the pros and cons of this particular type of insurance.

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Critical Illness Cover provides financial protection to you with a lump sum payout if you are struck down by an illness or serious condition.

Critical Illness Cover provides financial protection to you with a lump sum payout if you are struck down by an illness or serious condition.

There are many scenarios in which long term ill-health can result in being out of work a long time, the kind of time that most cannot afford to go without pay for.

It’s stressful enough going through disability, occupational disease or a debilitating condition as it is, and that’s without taking into account the extra difficulties a financial burden brings if you are struggling to pay for bills, rent and food. That’s not to say Critical Illness Cover is for everyone, especially as people in different circumstances need different approaches to how they manage personal risk. Below we look at the pros and cons of Critical Illness Cover, which should hopefully provide some clarity on how useful it might be to your own circumstances.

Critical Illness Benefits

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There are many benefits in taking out a Critical Illness Cover policy, some of which were briefly mentioned above. Let’s look at the key positives behind purchasing such a policy.

Financial security & peace of mind

A pay-out under a critical illness cover under such circumstances will mean that you and your loved ones will have peace of mind, so rather than worrying about debt or cash-flow problems you can focus on recovering from the condition itself. Bills can be paid, loved ones supported financially, or even time taken abroad for the sake of your own wellness. Whatever one chooses to do with the lump-sum payment, this cover removes the burden of immediate financial worry, allowing you to focus on your health.

A high rate of payout

Having decided you want this form of protection against Critical Illness, you want to be sure that it will respond when you need it to. Luckily, this is one of the highest payout rates in the insurance world, and The Association of British Insurers (ABI) found that in 2018, over a billion pounds was paid out to Critical Illness claimants in the UK, to over 16,000 claimants, with the percentage of new claims paid at 92%, at an average of £71,000 each.

Tailored to your needs

Not everyone’s life situation is the same, and people purchase Critical Illness Cover for different reasons. For some it is a sleep-easy purchase and a real “just in case” buy, when for others it is necessary to protect from financial ruin. These policies can be tailor-made to suit people’s own personal circumstances, as the policyholder can choose the level of cover and range of conditions the policy applies to. For example if you are a parent, you might be able to extend coverage to your children in the event you have to take time off work to care for them as a result of their own critical illness.

You are a direct beneficiary

This is an insurance policy that pays directly to you, so you benefit directly from the premiums you’ve paid. That being the case you are able to choose what is done with the claim payment. Indeed whilst you would want to avoid being in the position of having to make a claim, one could make sure that, upon settling your outgoings, you are able to provide further for your children, investing any claim settlement for their future benefit.

Critical Illness Disadvantages

There are, of course, some potential disadvantages to keep in mind.

Policy exclusions

Not every scenario will result in a pay-out from your Critical Illness Cover. Different insurers will have differing terms and coverage levels with many having optional conditions to extend the policy conditions. That being the case, the importance of being clear on what you have coverage for and what you don’t cannot be overstated. Because of this, it is vital that ahead of agreeing to sign up to a policy, you have checked the terms and conditions thoroughly. If you aren’t clear on the range of cover you have, ask the insurer for clarity. It can also be helpful to have an insurance advisor examine your contract, as they can highlight which illnesses you’ll be financially protected for and which ones you won’t.

Age restrictions

Most policyholders aren’t usually affected by policy age restrictions but it is still important to note them in case they do. For example, some policies have an upper age limit (at purchase) of 60 and a maximum term of 50 years, with the policy ending when one of those limits is reached (whichever comes sooner).

Coverage and policy variations

Depending on your personal circumstances, you will be given varying premiums and differing amounts you are insured for. Health, lifestyle and age all affect what your Critical Illness policy looks like. Personal questions on lifestyle choices will all be a part of the application process, and whilst may seem intrusive, are necessary factors insurers will take into consideration. If you feel your lifestyle might need some improvement, it will be wise to make these changes before getting a quote, as this could result in a lower premium. However one must note that whatever your intentions of improvement might be, what is provided on the application must be accurate and correct as of writing; deviation or error can lead to denied pay-outs.


As with anything, it’s important to get the balance right between appropriate levels of premium and cover – if one isn’t careful, you could find yourself paying excessive premiums for coverages you don’t need when there are other policies providing a fair amount of cover for a more affordable cost. It is important to carry out the necessary due diligence so that you can find the right deal for you.