Taking out a critical illness policy can be expensive but could be worth it should you get seriously ill. Here is how to decide if you need it and what level of cover to choose.
Most insurers let you add critical illness cover to a life insurance policy. This would pay out if you die or get diagnosed with a serious condition during the policy's term.
It could give you a lump sum of money to help you pay the bills or support loved ones should you face a serious illness, injury or disability.
Here are the main pros and cons of critical illness cover:
Lump sum when you need it
Available later in life
Claim on a range of conditions
High monthly premiums
Age restrictions apply
Conditions covered can vary
Most insurers specify how serious your condition must be before they will pay out
Each policy covers a set number of conditions, and this will vary depending on your insurer.
Here are some examples taken from a critical illness cover policy provided by Legal & General:
Cancer, excluding less advanced cases
Alzheimer's disease, resulting in permanent symptoms
Liver failure at an advanced stage
Paralysis of a limb, total and irreversible
Third degree burns, covering 20% of your body's surface area or 20% of your face or head
Check the policy document before you apply to understand the level of cover you are taking out.
Compare critical illness policies here
To choose the right amount of cover, write a budget to see how much you spend on outgoings each month.
If you are unable to work due to a serious medical condition you will need to have enough to cover you for months or years.
Choose your cover amount: Most insurers let you choose an amount, up to their upper cover limit, e.g. £3 million. You cannot change your cover amount after the policy has started.
Choose how long the policy will last: Insurers usually set a maximum age or policy term, like an upper age of 74 or a maximum term of 50 years, whichever is soonest. You cannot change the policy term after you apply.
The amount of cover and term you choose will affect how much you pay each month.
You need to get quotes from insurers to find out how much the cover you want will cost.
Be honest and disclose all information about any pre-existing medical conditions you have, otherwise your policy will be invalid and you will not be able to claim.
Depending on the policy you choose, you could apply:
Online, by completing a quote on an insurer's website
Over the phone, by speaking to an insurer's financial adviser
In person, by visiting an insurer and speaking to their financial adviser
Buying online gives you freedom to choose the exact cover you want, including the lump sum payout and how long the policy will last. Use our comparison to find a critical illness policy.
If you get a quote over the phone or in person, an adviser will give you guidance on the right policy for your personal circumstances. However, you may need to pay a fee for this service.
If you want advice, here are some tips on how to find an adviser you can trust.
Alternatively, you could use a broker who will aim to find you the best critical illness policy for the cheapest price.