Critical illness insurance

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For most people, a serious illness that stops income is a major financial problem. You are four times more likely to get a serious illness than to die before reaching 65. Over half of cancer sufferers who are working when diagnosed have to give up work or change their roles as a result of their diagnosis. More people are surviving cancer, but it can be challenging to health and finances. If cancer is terminal, then a cash sum can help financially protect the home of the left behind partner and children.

Being diagnosed with cancer often means extra costs such as transport to and from hospital for regular treatment, at the very time income is reduced with time off work. Cancer is by far the main cause of critical illness claims, and breast cancer is the most common reason for claims from women. After cancer, brain tumours, heart attack/strokes and multiple sclerosis are the three most claimed for conditions.

What critical illness insurance covers

If you are diagnosed with a life-threatening condition, critical illness insurance pays you a tax-free lump sum. The policy will specify the illnesses that will be covered. No two critical illness insurance policies are alike; each insurer has their own list of covered illnesses. Cancer is always included, but how cancer is defined and which cancers are covered varies by insurer.

You can use the lump sum however you like - you can pay off your mortgage or bills, pay for medical treatment, make changes to your home, pay for your living expenses or take a holiday.

Severity based plans 

If you became ill with a condition that was listed on the policy, the chances of beating it or living more than a few months used to be very low. So if you became ill with an insured condition and a claim had been paid, the insurers would no longer offer you cover. But modern medicine means that many more conditions are beatable, and others can go into remission. People can live for many years with some diseases.

An increasing number of insurers recognise that some conditions, such as early stage cancers where the removal of a breast is required, warrant some pay out instead of nothing at all. This is why many policies now automatically include severity based cover, where the pay-out is directly linked to how severe your condition is. If you have a claim paid, live for another ten years and a condition worsens, or if a new illness is diagnosed, full cover continues and further claims can be made. The amount paid is usually a lower sum than for a critical illness, either limited by value or a percentage of the full cover; 25% is typical.

Cancer diagnosis 

A cancer diagnosis does not automatically trigger a pay-out because not all cancers are covered by a critical illness plan. Due to advances in medicine, not every type of cancer will have a severe impact on your life if it’s diagnosed and treated early enough. A cancer needs to have spread or reached a specified severity to be covered. Cover may apply if you are diagnosed and the policy includes severity based cover.

Terminal illness

Terminal illness cover is included and will cover you if you’re diagnosed with a terminal illness and have a life expectancy of 12 months or less. It provides financial support at a time when it could be needed the most but will only cover the illnesses specified in the policy.

Existing cancer patients

If you have, or have had, cancer, most insurers will usually refuse to offer cover – some may also refuse cover if you have a family history of cancer. A few specialist insurers will consider cover for those who have, or have had, cancer, but this often excludes any cover related to cancer.


Insurance is usually cheaper the younger you are, but the cost will also depend on your medical history and that of your close family, and also whether or not you smoke. Insurers sometimes reduce costs if a pre-existing condition, such as cancer, is excluded from the policy.

Life insurance 

Some policies cost more because they cover more illnesses or are combined with a life insurance policy. It is quite common to combine life and critical illness covers in one policy, with more insurers offering combined cover than stand-alone critical illness insurance.

Insurers may include free cover for children under 18, but cover is often restricted to certain illnesses and for a lower pay-out than for an adult. Insurers suggest that up to three out of every four critical illness claims for children is for cancer. Malignant brain tumours and leukaemia are the main causes.

Extra help

Helplines and online support are common, but nothing specific to cancer.

Not covered 

Any illness not specified is not covered. It is normal to restrict cover to certain cancers only, with some types such as non-invasive cancers, excluded.


Critical illness insurance covers you up to a certain age, which can be anything from 55 to 75.  Typically with cancer, you may become ineligible just at the age when the cancers covered become more common, so checking the age limit on when insurers cease offering cover is important.

Choosing the right policy

Choosing the right critical illness policy can be a real challenge. There are now so many different policies on the market, with differing terms, definitions and levels of cover that it’s easy to get confused. As it may be many years between buying a policy and claiming, it is then too late to find out if you made a bad choice. This is one class of cover that using a specialist Independent Financial Advisor for is often a good idea; particularly as many insurers will not deal direct with customers.

Cancer cash covers versus critical illness policies

Some insurers confuse by calling cancer cash policies, special critical illness covers. While a cancer cash policy pays out an agreed sum on diagnosis, a critical illness one pays out an agreed sum only if the diagnosis is critical or terminal. Cancer cash policies tend to pay out lower sums than critical illness policies.

Thinking about cancer insurance?

Download our free PDF guide



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Cancer insurance guide

  • Health insurance and cancer
  • Cancer cash insurance
  • Travel insurance for cancer patients
  • Critical illness insurance
  • Income protection insurance

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