Income protection vs critical illness cover: what's the difference?
Income protection replaces part of your income, typically 50% to 65%, if illness or an accident stops you working. Critical illness cover pays a tax-free lump sum if you're diagnosed with a condition your policy lists. It doesn't pay for back problems or stress, which are common reasons for time off work.
In short
- Income protection replaces part of your income, typically 50% to 65%, if illness or an accident stops you working. It pays until you can work again, retire, die or the policy ends, whichever is sooner. Some policies limit how long each claim is paid.
- Critical illness cover pays a tax-free, one-off lump sum if you're diagnosed with a condition your policy lists. It pays out only once, then the policy ends.
- Common reasons for time off work, such as back problems and stress, aren't covered by critical illness cover. Income protection covers most illnesses that leave you unable to work, including stress-related illness and mental health conditions.
- In 2025, insurers paid 90.2% of new critical illness claims and 79% of new income protection claims. These ABI and GRiD figures count individual and group policies together.
- Citizens Advice says critical illness cover tends to be a less expensive way to protect your income against illness. It covers a very limited range of illnesses, though, and for a shorter period than income protection.
- You can have both. Critical illness insurance is typically taken out alongside other cover, such as income protection or life insurance.
What is the difference between income protection and critical illness?
Income protection pays a regular income while illness or an accident stops you working. Critical illness cover pays a one-off lump sum if you're diagnosed with a condition your policy lists.
Income protection
Income protection makes regular payments that replace part of your income if illness or an accident stops you working. It typically pays 50% to 65% of your income, until you can work again, retire, die or reach the end of the policy term, whichever is sooner.
There's often a wait before payments start, called the deferred period, which you agree when you buy the policy. The most common are 4, 13 or 26 weeks, or a year. The longer the wait, the lower your monthly premiums.
Critical illness cover
Critical illness cover pays out if you're diagnosed with one of the conditions specified in your policy. It's a tax-free lump sum that could help you pay off your mortgage, pay for treatment or pay household bills.
A policy only pays out once, then it ends. Some policies make a smaller payment for less severe conditions, or if one of your children has a condition the policy lists.
| Feature | Income protection | Critical illness cover |
|---|---|---|
| What it pays | Regular payments that replace part of your income | A one-off lump sum |
| How much | Typically 50% to 65% of your income | The amount of cover you choose, which you can adjust to your needs and monthly payments |
| What it pays out for | Being unable to work because of illness or an accident | A diagnosis of a condition listed in the policy; most policies also set how serious it must be |
| Wait before it pays | A deferred period, most commonly 4, 13 or 26 weeks or a year | A survival period on most policies, usually 10 to 14 days after diagnosis |
| Number of claims | As many as you need while the policy lasts | One, then the policy ends; some policies also make smaller payments for less severe conditions |
| Back problems and stress | Covers most illnesses that leave you unable to work, including stress-related illness and mental health conditions | Not covered |
| Income tax on what it pays | Generally tax free if you pay the premiums out of taxed income | Not taxable as income |
How the two usually work, from MoneyHelper, ABI and HMRC guidance; the survival period is from Aviva's critical illness guidance. Each policy's own terms decide what it pays.
What do you have to show to make a claim?
For income protection, you have to show that illness or an accident stops you working. A critical illness claim needs a diagnosis that matches a condition in your policy, and most policies also say how serious it must be.
Income protection
You can choose from three main levels of cover, each with its own test of when you can't work:
- Own occupation cover pays if you can't do your own job. It's usually the most expensive, but a successful claim is more likely.
- Suited occupation cover pays if you can't do your own job or a similar one that suits your qualifications and experience.
- Any occupation cover pays only if you're too ill to do any kind of work. It's usually the cheapest, but there's a higher risk it won't pay out.
Income protection covers most illnesses that leave you unable to work, including stress-related illness, mental health and physical health conditions. It doesn't pay out if you're made redundant.
During a claim, your insurer has the right to review your health and disability, and may stop paying if it no longer thinks you qualify.
Critical illness cover
Every critical illness policy must cover three core conditions, to at least the Association of British Insurers' (ABI) model wordings (its standard definitions):
- Cancer (excluding less advanced cases): a malignant tumour confirmed by histology (lab tests on tissue) and invading tissue. Cancers classed as pre-malignant, in situ, of borderline malignancy or of low malignant potential are left out.
- Heart attack (of specified severity): a definite diagnosis of acute myocardial infarction with death of heart muscle. Angina without myocardial infarction is left out.
- Stroke (resulting in permanent symptoms): death of brain tissue with a permanent neurological deficit. A transient ischaemic attack (TIA, or mini-stroke) is left out.
Common exclusions include non-invasive cancers, high blood pressure and injuries such as broken bones. For the illnesses that are covered, Citizens Advice says you usually have to be extremely ill or totally disabled before you can claim.
Most policies also have a survival period (how long you must live after diagnosis before it pays), usually 10 to 14 days.
| Insurer | Income protection | Critical illness cover |
|---|---|---|
| Aviva | Living Costs Protection, which you can apply for directly by phone: pays if illness or injury stops you doing the duties of each job you've had in the 12 months before, and you aren't doing any other work | Critical Illness Plan: pays if you're diagnosed with a critical illness that meets Aviva's definition and survive for at least 10 days; 52 conditions covered |
| Legal & General | Income Protection Benefit: an own occupation definition if you worked 16 or more hours a week over the 3 months before; otherwise a test of activities of daily living | Critical Illness Cover, taken with L&G life insurance when bought directly: pays if you're diagnosed with, or have a medical procedure for, a covered illness and survive for 14 days; 36 conditions pay the full amount |
From each insurer's own product pages, policy summaries and policy conditions. Other insurers use their own definitions.
Our Aviva income protection review and Legal & General income protection review cover each policy in detail. Critical illness cover conditions explains what policies list.
Compare quotes from a panel of UK insurers
- Ages 18–59
- Paid monthly
- 60 second form
- Free quotes, no obligation
How many income protection and critical illness claims are paid?
In 2025, insurers paid 90.2% of new critical illness claims and 79% of new income protection claims. These figures from the ABI and Group Risk Development (GRiD) count individual and group policies together.
| Figure | Income protection | Critical illness cover |
|---|---|---|
| Share of new claims paid (individual and group policies) | 79% | 90.2% |
| New claims paid (individual and group policies) | 18,469 | 20,498 |
| Total paid on individual policies | £209 million, a record | £1.25 billion |
| Average claim on individual policies | £10,700 | £67,000 |
| Most common reason for an individual claim | Musculoskeletal conditions, one-third of claims | Cancer, 65% of claims |
Individual-policy figures from the ABI and combined individual and group figures from the ABI and GRiD, both published on 29 June 2026.
The two figures don't measure quite the same thing. A critical illness claim is a one-off lump sum, while income protection keeps paying until you can work again or the policy ends.
In the combined figures, the totals and averages also count income protection claims already in payment. The income protection figures include the Association of Financial Mutuals too.
In its September 2026 pure protection market study, the Financial Conduct Authority (FCA) found income protection had the lowest rate of claims accepted across those products, at 86%.
Income protection often comes with support services to keep you in work or help you back into work. In 2025, 7,600 people returned to work with the support of income protection payouts and insurer-provided health services.
Why claims are turned down
In its 2024 figures, the ABI named two common reasons for declined claims. Policyholders hadn't disclosed existing medical conditions when taking out the policy, or didn't meet the policy definitions.
At Aviva, around three-fifths of the income protection claims declined in 2025 were due to misrepresentation (giving wrong or misleading information) during the application.
| Insurer | Income protection | Critical illness cover |
|---|---|---|
| Aviva | 90% of claims accepted; just over £63.5 million paid to around 4,100 new and existing claimants | 90.7% of claims received paid, counting critical illness, children's benefit and total permanent disability claims together; more than £388 million paid |
| Legal & General | 85% of claims paid, counting new claims and claims that continued from earlier years; £9.2 million paid to 814 claimants | 92.9% of claims paid; 4,051 claims paid, worth £291 million, an average of £71,755 |
Each insurer publishes its own figures and counts claims in its own way, so the rates can't be compared directly.
Our guide to critical illness payout rates explains how insurers' own claims figures are worked out.
Is critical illness cover cheaper than income protection?
Citizens Advice says critical illness cover tends to be a less expensive way to protect your income against illness. It adds that critical illness cover only pays for a very limited range of illnesses, and for a shorter period than income protection.
What you pay for either policy depends on your personal details and the cover you choose:
- Income protection prices depend on your age, occupation, whether you smoke or have smoked, and your health (including weight and family medical history). The percentage of income you cover, the deferred period and the range of illnesses and injuries covered matter too.
- Critical illness cover prices depend on your age, occupation, whether you smoke or have smoked, and the level of cover. Your current health, weight and family medical history count too.
Several choices you make when setting up a policy also affect the price:
- A longer deferred period on income protection means lower monthly premiums. People usually match it to their employer's sick pay, such as a six-month deferred period if you get six months' full pay.
- Agreeing to claim only when you can't do any work at all, rather than just your own job, usually costs less. But any occupation cover like this has a higher risk of not paying out.
- A shorter benefit period caps how long each income protection claim pays. Legal & General's limited benefit period pays for up to 12 or 24 months per claim, which it describes as a way to keep premiums down. Aviva's Living Costs Protection pays for up to 12 months per claim.
- On income protection, standard premiums can be increased by the insurer over time. Guaranteed premiums stay fixed for as long as you have the policy, though they can cost slightly more in the short term.
- On critical illness cover, guaranteed premiums also stay fixed for as long as you have the policy, while reviewable premiums are usually reviewed every five years.
If existing health issues mean you're considered at risk of a particular condition, that illness could be excluded from a critical illness policy or you might pay a higher premium.
- Income protection calculator: work out the monthly income you might need
- Critical illness calculator: estimate the lump sum that might cover your costs
How do they work with sick pay and benefits?
Income protection usually pays a share of your income minus benefits you can claim, and people usually try to match its deferred period to their sick pay. A critical illness payout is a one-off lump sum, and Universal Credit counts all your money and savings as capital.
If you're eligible, Statutory Sick Pay (SSP) is £123.25 a week, or 80% of your normal weekly earnings if that's lower, for up to 28 weeks. Employees are usually moved onto SSP within six months, and very few employers support staff who are off sick for more than a year.
If you're self-employed, you won't get sick pay, though you might qualify for benefits. You can't get New Style Employment and Support Allowance (ESA) while getting SSP from an employer, but you can apply up to 3 months before your SSP ends.
| Support | How much | For how long |
|---|---|---|
| Statutory Sick Pay (SSP) | £123.25 a week, or 80% of your normal weekly earnings if lower | Up to 28 weeks |
| Employment and Support Allowance (ESA) while your claim is assessed | Up to £95.55 a week if you're 25 or over, or £75.65 if you're under 25 | Normally 13 weeks |
| ESA, work-related activity group | Up to £95.55 a week | 365 days for New Style ESA |
| ESA, support group | Up to £145.90 a week | No time limit for New Style ESA |
| Most a week | |
|---|---|
| Statutory Sick Pay | £123.25 |
| ESA assessment rate, under 25 | £75.65 |
| ESA assessment rate, 25 or over | £95.55 |
| ESA, work-related activity group | £95.55 |
| ESA, support group | £145.90 |
Statutory Sick Pay is £123.25 a week or 80% of your normal weekly earnings, whichever is lower, for up to 28 weeks. ESA figures are the most you can get; New Style ESA lasts 365 days in the work-related activity group and has no time limit in the support group.
How income protection fits in
Income protection usually pays a share of your income minus any benefits you can claim and income from similar policies. Insurers set their own rules on what they deduct:
- Aviva doesn't look at what you earn for Living Costs Protection, or at income you keep getting while you're ill or injured. It won't reduce your benefit if you receive other income.
- Legal & General deducts 60% of any pre-tax income you still get from an employer (such as sick pay) or a business. In its own example, £1,000 a month of company sick pay reduces a £2,000 monthly benefit by £600, to £1,400 a month.
- Legal & General doesn't deduct income from savings or benefits, which it says include Statutory Sick Pay and contributory ESA.
- At Aviva, Living Costs Protection benefit may affect your eligibility for means-tested benefits (benefits based on your income and savings). Legal & General says its monthly benefit might affect a claim for some means-tested benefits.
How critical illness cover fits in
A critical illness payout is a one-off lump sum. Your (or your partner's) savings don't affect how much New Style ESA you're paid.
For Universal Credit, the Department for Work and Pensions (DWP) counts all money, savings and investments you own as capital. Under £6,000 doesn't affect your award. Between £6,000 and £16,000, payments drop by £4.35 for every £250, and you must usually have no more than £16,000 to claim.
Check before you rely on benefits
Some types of money, savings, investments or other assets might not affect a Universal Credit claim. You still need to tell the DWP about them so it can decide whether to leave them out.
Can you have both?
You can. Critical illness insurance is typically taken out alongside other cover, such as income protection or life insurance. Each pays for something different: critical illness cover pays a one-off lump sum for a listed condition, while income protection replaces part of your income when you can't work.
If you're diagnosed with a covered condition, a critical illness lump sum can help pay for your mortgage, rent, treatment or changes to your home. If the illness also stops you working, income protection can pay a regular income after the deferred period until you can work again or the policy ends.
Check how each income protection policy treats other cover. Legal & General deducts in full any regular payments you can get from other insurance policies because of your incapacity (being unable to work). Aviva says its Living Costs Protection benefit may affect a claim on other income protection policies you or your employer has.
Waiver of premium
Waiver of premium covers your monthly premiums automatically if illness or injury stops you working. At Aviva, it's included at no extra cost on all Income Protection+ and Living Costs Protection policies. On critical illness cover, you can pay a bit extra to add it, and it usually kicks in only after you've been off sick for at least six months.
Life insurance vs critical illness cover
Life insurance pays out when you die, not when you lose an income through illness or disability. Critical illness cover is often combined with it in a combined policy, which the FCA calls accelerated critical illness cover. That policy pays out on the first event: death or a critical illness diagnosis.
Not every policy works that way. Bought directly, Legal & General's Critical Illness Cover is a separate policy taken alongside its life insurance, and it can pay out separately from the life cover. Aviva's direct Critical Illness Plan doesn't pay out on death.
- Income protection insurance: how it works and what to check
- Critical illness cover: what it pays out for and how to get quotes
- Aviva critical illness cover review
- Legal & General critical illness cover review
Is income protection or critical illness cover better?
Neither is better for everyone: income protection covers a lost salary when you can't work, while critical illness cover pays for a listed diagnosis. MoneyHelper says someone with no dependants (people who rely on your income) might be more interested in income protection.
Income protection
The FCA says income protection is a key part of proposals to reduce the protection gap, particularly for self-employed and gig-economy workers. MoneyHelper says you might not need income protection if:
- you could get by on your sick pay, for example with an employee benefits package that pays an income for 12 months or more
- you could survive on benefits that cover all your outgoings, or have enough savings to support yourself, bearing in mind they might need to last a long time
- you could take early retirement, or your partner or family would support you
Critical illness cover
MoneyHelper suggests considering critical illness cover if:
- you and your family depend heavily on your income
- you don't have enough savings to tide you over a serious illness or disability, remembering you might have extra costs such as adapting your home or transport to appointments
- you don't have an employee benefits package to cover a longer time off work due to sickness
MoneyHelper says you might not need it if you have enough savings for bills, rent or mortgage payments and the extra costs of a serious illness or disability. The same applies if you already have some cover through your employer's employee benefits scheme.
What to check before you choose
Before you apply, check your employer sick pay, your savings and how each insurer defines a valid claim.
- Check what you'd get if you couldn't work Check your employment contract for company sick pay or group cover, or work out what you'd live on if you're self-employed. Employees are usually moved onto Statutory Sick Pay within six months.
- Work out how long your savings would last Compare your savings against your monthly bills and any extra costs of a serious illness. MoneyHelper suggests trying to save enough money to cover three months of living expenses.
- Decide what worries you most Critical illness cover pays a one-off lump sum for the conditions it lists, but not for back problems and stress. Income protection covers most illnesses that leave you unable to work.
- Set your priorities if the budget is tight If you can't afford cover for everything you want to protect, MoneyHelper says you could think about your priorities or consider a lower level of cover. Some protection might still be better than none.
- Compare the policy terms as well as the price Income protection definitions and exclusions can vary between insurers. The conditions critical illness policies cover vary significantly too: the most comprehensive cover 50 or more conditions, while others are much more limited.
Compare November 2026 life insurance quotes
Fill in one quick form and a broker will call you to compare plans from a panel of UK insurers. Free quotes, no obligation.
Our broker partner Reassured is rated Excellent on Trustpilot (opens in a new tab): 4.8 out of 5 from 105,367 reviews (checked 2 October 2026).
Over 1 million families helped**
Income protection vs critical illness FAQs
It replaces only part of your income, typically 50% to 65%. There's often a deferred period before payments start, and it doesn't pay out if you're made redundant. Some policies limit how long each claim pays: Legal & General's limited benefit period pays for up to 12 or 24 months. Other income can cut what you're paid too: Legal & General deducts 60% of the pre-tax income you still get from an employer. In the FCA's pure protection market study, income protection had the lowest rate of claims accepted of those products, at 86%. Critical illness cover has limits too. It pays out only once and doesn't cover back problems or stress. Citizens Advice says it covers a very limited range of illnesses.
Income protection isn't the same as critical illness insurance. Critical illness cover pays a one-off lump sum if you're diagnosed with a condition your policy lists. Income protection makes regular payments until you can work again, retire, die or reach the end of the policy term, whichever is sooner. Citizens Advice says critical illness cover tends to be a less expensive way to protect your income against illness and disability. But it covers a very limited range of illnesses and for a shorter period than income protection. Some critical illness policies can pay a claim as an income. On Royal London's Personal Menu Plan, you can choose to have a Critical Illness Cover claim paid as a lump sum or as a level or increasing monthly income.
Income protection covers most illnesses that leave you unable to work, including stress-related illness, mental health and physical health conditions, though definitions and exclusions can vary between insurers. In 2025, one-third (33%) of individual income protection claims were for musculoskeletal conditions (problems with muscles, bones and joints). Insurers also paid £39 million of individual claims for mental health conditions, nearly a fifth (19%) of all claims paid. Critical illness cover doesn't cover common illnesses that keep people off work, such as back problems and stress.
Income protection payments are generally tax free if you pay the premiums out of taxed income, with no limit on the amount. A critical illness lump sum isn't taxable as income. Under an employer's income protection scheme, sick pay is tax free only in proportion to the share of the premiums you paid.
Income protection doesn't pay out if you're made redundant. Aviva's Living Costs Protection doesn't cover redundancy or unemployment, and Legal & General's Income Protection Benefit doesn't pay out if you become unemployed or are made redundant. Critical illness cover pays out when you're diagnosed with a condition your policy lists. Some types of insurance can help with your mortgage repayments if your income falls because of redundancy, accident or sickness. Short-term income protection policies, sometimes called accident, sickness and unemployment (ASU) products, usually only pay out for one or two years.
You can claim on income protection as many times as you need while the policy lasts. Critical illness cover only pays out once, then the policy ends. Some critical illness policies make a smaller payment for less severe conditions, or if one of your children has a condition the policy lists. Some income protection policies set rules on repeat claims. Aviva's Living Costs Protection pays for up to 12 months per claim. After 12 months' worth of payments, you need to work at least 16 hours a week for at least six months in a row before you can claim again.
The Financial Services Compensation Scheme (FSCS) protects 100% of eligible income protection and critical illness claims if the insurer failed on or after 3 July 2015. If the firm failed before that date, claims are 90% protected.
You have 30 days from buying an income protection or critical illness policy to change your mind and get a full refund.
Sources
The facts on this page come from these sources.
- MoneyHelper: What is income protection insurance? (opens in a new tab); What is critical illness cover? (opens in a new tab); Personal insurance when you’re self-employed (opens in a new tab); What is life insurance? (opens in a new tab); How to know what kind of protection insurance you need (opens in a new tab); Help with mortgage payments (opens in a new tab) · moneyhelper.org.uk, accessed 26 September 2026 and 2 October 2026; 26 September 2026; 2 October 2026.
- Association of British Insurers: ABI Guide to Minimum Standards for Critical Illness Cover (16 September 2022, updated April 2023) (opens in a new tab); Income protection (opens in a new tab); Breakdown of combined individual and group claims using data from the ABI and GRiD, 2025 (table image "2025 protection data table") (opens in a new tab); Critical illness cover (opens in a new tab); Protection insurers pay out £7.84 billion to help customers safeguard their finances (opens in a new tab); Record £8bn paid out in vital protection claims during 2024 (opens in a new tab) · keystone-cms-production-amfyhhecavg8gneq.northeurope-01.azurewebsites.net, abi.org.uk, accessed 26 September 2026; 26 September 2026 and 2 October 2026.
- Citizens Advice: Critical illness insurance (opens in a new tab); Income protection insurance (opens in a new tab) · citizensadvice.org.uk, accessed 26 September 2026.
- Aviva: Children’s critical illness benefit (opens in a new tab) · aviva.co.uk, accessed 26 September 2026.
- GOV.UK: IPTM6110 - Sickness disability and unemployment insurance: tax treatment: main rules: scope of the exemption: ITTOIA05/S735 (opens in a new tab); IPTM6010 - Sickness, disability, unemployment and long-term care insurance: introduction and overview (opens in a new tab); Universal Credit: money, savings and investments (opens in a new tab); Statutory Sick Pay (SSP): what you'll get (opens in a new tab); New Style Employment and Support Allowance (opens in a new tab); Employment and Support Allowance (ESA): what you’ll get (opens in a new tab); Benefit and pension rates 2026 to 2027 (extract: Employment and Support Allowance) (opens in a new tab); IPTM6120 - Sickness disability and unemployment insurance: tax treatment: employer’s schemes and other situations where someone else has paid part of the premiums: ITTOIA05/S743 (opens in a new tab) · gov.uk, accessed 26 September 2026; 2 October 2026; 26 September 2026 and 2 October 2026.
- Financial Ombudsman Service: Income protection insurance (consumer guide to complaints) (opens in a new tab) · financial-ombudsman.org.uk, accessed 26 September 2026.
- Financial Conduct Authority: MS24/1.5: Market study into the distribution of pure protection products to retail customers – Final Report (September 2026) (opens in a new tab); MS24/1.3: Structure of the UK pure protection market for retail customers (September 2025) (opens in a new tab) · fca.org.uk, accessed 26 September 2026.
- Financial Services Compensation Scheme: Insurance: what we cover (opens in a new tab) · fscs.org.uk, accessed 26 September 2026.
-
Insurer documents:
Aviva,
Legal & General,
Royal London.
Show the 17 documents
- Aviva: Income protection insurance (Living Costs Protection) product page (opens in a new tab), accessed 24 September 2026.
- Aviva: Living Costs Protection policy conditions (AL19002) (opens in a new tab), accessed 26 September 2026.
- Aviva: Critical Illness Plan policy summary (DA09001) (opens in a new tab), accessed 24 September 2026.
- Aviva: Critical illness cover (Critical Illness Plan) product page (opens in a new tab), accessed 24 September 2026.
- Aviva: Aviva paid nearly £2 billion in protection claims in 2025 (claims statistics 2025) (opens in a new tab), accessed 24 September 2026.
- Aviva: Your technical guide to protection at Aviva (AL99016) (opens in a new tab), accessed 24 September 2026.
- Aviva: Living Costs Protection policy summary (AL19001) (opens in a new tab), accessed 26 September 2026.
- Legal & General: Income Protection Benefit Policy Summary (LG1922) (opens in a new tab), accessed 25 September 2026.
- Legal & General: Income protection insurance page (opens in a new tab), accessed 25 September 2026.
- Legal & General: Critical Illness Cover product page (opens in a new tab), accessed 25 September 2026.
- Legal & General: Life Insurance and Critical Illness Cover Policy Summary (QGI14786) (opens in a new tab), accessed 25 September 2026.
- Legal & General: L&G Retail Protection claims statistics 2025 (adviser infographic, "2025 Claims") (opens in a new tab), accessed 25 September 2026.
- Legal & General: L&G press release - L&G paid out over £1.388bn protection claims in 2025 (opens in a new tab), accessed 25 September 2026.
- Legal & General: Protection Product Profiles, adviser guide (W12549) (opens in a new tab), accessed 25 September 2026.
- Legal & General: Income Protection Benefit Policy Terms and Conditions (LG2013) (opens in a new tab), accessed 26 September 2026.
- Legal & General: Life Insurance Policy Terms and Conditions (QGI14872) (opens in a new tab), accessed 25 September 2026.
- Royal London: Key facts of Personal Menu Plan, July 2026 (44KF0892) (opens in a new tab), accessed 25 September 2026.
More guides
-
Income protection
A monthly payment if you can’t work due to accident or illness.
-
Standalone critical illness cover
Critical illness cover without life insurance: how it works, who sells it on its own and what to check before you buy.
