Critical Illness Insurance: Do You Really Need It?

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With so many insurance options out there, it’s hard to separate the necessary from the irrelevant. Critical illness insurance can protect you financially should you develop a serious illness—but do you really need it?

Let’s find out.

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What is critical illness insurance?

Financial circumstances can change with very little notice. You might lose your job or need to pay for emergency home and car repairs, but illness is another cause of changing financial circumstances.

You – or a loved one – might develop a condition that means you have to take time off of work or pay for specialist treatments. Regular bills, such as utilities, rent, loan and mortgage repayments, could be in jeopardy, but this is where critical illness insurance comes in.

The insurance offers support if you need it through a one-off payment – which is tax-free. You can use the payment to cover your mortgage, stay on track with other repayments or adapt your home if necessary.

Which illnesses does the policy cover?

The variety and degree of illnesses covered depend on your chosen provider, how much coverage you pay for and whether your illness qualifies.

Some conditions aren’t considered serious enough for the insurer to release a payment, but if the illness impacts your ability to work, you should be eligible for a payment.

Common illnesses eligible for payments include:

  • Heart Attacks

  • Invasive Cancers (Depending on the staging and treatment)

  • Strokes

  • Multiple Sclerosis

  • Alzheimer’s

  • Traumatic Brain Injury

  • Organ Transplants

  • Parkinson’s Disease

In general, if you – or a loved one – experience an illness that causes a lasting disability or means you cannot work your critical illness insurance policy should cover it.

However, some illnesses aren’t included in the policy. They include:

  • Broken Bones

  • Injuries that will heal quickly

  • Non-Invasive Cancers

  • High Blood Pressure

Why is critical illness coverage necessary?

Critical illness insurance can help you manage your bills and protect your family from financial issues.

It’s important to consider that while there’s help from your employer in the form of statutory sick pay and the ability to claim benefits, they often don’t cover all of your bills.

For example, if you’re unable to work, after six months, you’ll be moved on to Statutory Sick Pay, which can offer up to £109.40 a week.

People can no longer claim old-style benefits because Universal Credit has replaced them. However, both UC and Personal Independence Payment might not be enough to cover your lost income.

Critical illness insurance policies can be invaluable for some key reasons.

It can protect your income

Even in two-income families, the effects of having to end employment can be devastating – especially if you rely on income.

A critical illness cover policy can help you and your family financially. For example, if you have a mortgage and other obligations, the benefits you receive might not be enough to cover your losses.

Relieves the financial impact of illness

If you or a loved one becomes critically ill, you might not have enough savings to cover treatment costs and bills. With the right cover, you won’t need to worry about depleting your savings, as the insurance policy will cover some costs.

When you might not need a critical illness insurance policy

Buying critical illness insurance is always a good idea because it gives you peace of mind. However, in some cases, you might not need the policy due to having financial support in place or an illness not impacting your household’s income much.

Do you have a lot of savings?

If you have money through a savings or investment product, you might be financially secure, even without an employment income. Some people prefer to use their savings, but it depends on whether you have a strong enough safety net.

Do you have any other financial commitments?

Financial commitments such as providing for your children, paying a mortgage or loan and credit card repayments require a consistent monthly investment. If you don’t have these obligations, you might not need to get critical illness insurance.

Is your partner able to cover everything?

When it comes to paying household bills and staying in line with your mortgage obligations, two-income households can sometimes still make ends meet without relying on insurance payments.

If your partner can cover all necessary costs, you can avoid making a claim and subsidise your lost income with any available benefits.

Things to consider before getting critical illness cover

As with any insurance policy, there are things to consider before adding critical illness coverage. These policies can ensure financial protection, but certain factors might impact your eligibility and monthly premiums.

Will an insurer offer critical illness coverage?

When deciding to offer critical illness coverage, work, age, and medical history can all impact your insurer’s decision. Some jobs come with higher risks of injury and accidents, so the provider will look at these factors to see whether you’re eligible.

Age and smoking history also matter, but some insurance providers will offer a policy with higher payments.

Are there any risks?

The insurer might be unwilling to offer you low premiums if you’re at a higher risk of certain critical illnesses. However, this depends on your medical history and whether there’s any evidence that you are predisposed to certain conditions.

Which level of cover do you want?

Insurers have lending criteria in place to determine whether an applicant is a safe option or not. You might only get basic cover if you don’t have a strong financial history or have dealt with other illnesses.

It also depends on how much you’re willing to pay each month, as the best cover will cost more in monthly premiums.

Would an alternative insurance option be better?

Along with critical illness insurance, other policies might be better for your needs. However, this depends on your illness type and whether you meet the eligibility criteria.

Life insurance policy

A life insurance policy provides support for partners and dependants in the event of a death. Some policies offer a tax-free lump sum (unless your loved ones have to pay inheritance tax), while others are known as decreasing policies.

Decreasing cover goes hand in hand with repayment mortgages, and the cover amount reduces over time, in line with your outstanding repayments.

Life cover can benefit some people, but critical illness insurance provides financial support for eligible serious illnesses instead of your loved ones receiving money if you pass away.

Income protection insurance

Income protection cover allows you to recover most of your salary for the time you’re away from work, but deductions are made for any benefits you receive. The good thing about this form of insurance is it covers you up until retirement age if needed.

However, people often choose critical illness coverage because it has much lower monthly premiums that fit the type of coverage you’re getting.

Applying for critical illness cover

With so many types of critical illness insurance available, it’s essential to consider which policy is right for you and whether you’re making the best decision.

The last thing anyone wants is to get stuck paying for insurance that doesn’t help them, so remember to look at the following factors before signing on the dotted line.

Will you need any add-ons?

Some policies include children’s critical illness coverage, while others have it as an add-on. The cover provides financial stability should a child become critically ill.

It’s good in many ways because parents might need to take time off work, but it’s up to you to decide whether the cover is right for your family.

Read the policy documents

It’s easy to skip through terms and agreements, but you should always read the policy documents before signing.

You might get a better deal with another provider, or the terms might not include a diverse range of illnesses, so it’s best to be sure you’re getting a good deal.

Have you been completely honest?

Insurance companies only pay money if you’ve been completely honest about your history. For example, claiming without telling the insurer that you have a terminal illness, they won’t offer any money.

Improve your borrowing options with critical illness cover

Critical illness cover can help you get a great mortgage deal and enjoy more financial freedom. Better still, it gives you peace of mind that you and your family will have security should anything happen.

By reading the policy thoroughly and making sure your cover will be enough for your monthly mortgage payments, you’ll make the right decision.

If you’d like to get the best mortgage deal for your needs, Believe Money has access to specialist providers that judge you individually.

Whatever your financial circumstances are, our dedicated team can support you. Contact us today for a free zero-obligation quote.

How It works

Step 1.

Simple, easy application

Step 2.

We search our panel of lenders to find the deal that’s right for you

Step 3.

When you confirm your chosen deal, we get your application moving

Step 4.

The money lands in your bank
account – usually within two weeks

We compare loans from our panel of the UK’s top lenders to get you the best deal.


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