Critical Illness Cover Vs. Terminal Illness Cover

When planning for the unexpected, it is important to understand the different types of protection available. Two key options are critical illness cover and terminal illness cover.

In this guide, we explain the differences between the two, how each type of cover works, and whether one or both may be suitable for your needs.

What’s the difference between critical illness and terminal illness cover?

Critical illness cover pays out a lump sum if you are diagnosed with a serious medical condition listed in your policy, such as cancer, heart attack or stroke. It is designed to support you financially while you recover. In many cases, people are able to return to a relatively normal life after receiving a payout.

Terminal illness cover pays out if you are diagnosed with a terminal condition and are expected to live for less than 12 months. It provides early access to your life insurance benefit, helping to support you and your family financially at the end of your life.

Key features of both insurance types compared

Here’s a brief overview showing what critical illness cover and terminal illness insurance offer, and the key differences between these types of cover:

Does terminal illness cover cost more?

• Terminal illness cover is typically included at no extra cost with most UK life insurance policies. Even the most basic and affordable life insurance products usually provide this as standard.

• Critical illness cover, on the other hand, usually comes at an additional cost and is more expensive, as claims are more common. It can sometimes be cheaper to take out a combined life and critical illness policy (which pays out once) rather than arranging separate policies.

Cost comparison example

The exact cost of cover will depend on your personal circumstances – such as whether you smoke, how much alcohol you consume, and your general health and lifestyle – as well as the level of protection you choose.

To give you an idea about the cost comparison of terminal illness vs critical illness cover, here’s an example for someone who’s a non-smoker, and looking to get £100,000 of cover lasting 20 years:

Can you get combined terminal and critical illness cover?

Yes – this is possible in several ways. Many insurers offer combined policies that include life insurance with terminal illness cover as standard, with the option to add critical illness protection for an additional cost. Some whole-of-life policies also include both benefits within a single plan.

If you want both types of cover, you have two main options:

• Bundled policies – Life insurance with critical illness add-on. This usually pays out once, on whichever event happens first (a critical illness diagnosis or a terminal illness diagnosis).

• Separate policies – You can take out standalone life insurance and a separate critical illness policy. In theory, this could result in two payouts: one if you suffer a serious illness, and another if you later receive a terminal illness diagnosis.

Best UK providers for terminal illness cover

The most suitable insurer for you will depend on the type of protection you need, your health, and your budget. That said, several well-known UK providers include terminal illness cover as standard with life insurance policies, and also offer optional critical illness protection:

• Vitality – Terminal illness cover is included with all term life insurance plans. Vitality also provides health rewards and wellbeing tools for policyholders who actively manage their lifestyle, with the potential for lower premiums if you remain healthy.

• HSBC – Terminal illness cover comes as standard with HSBC’s life protection policies. Customers can also choose life and critical illness cover, or upgrade to Life and Critical Illness Plus, which includes enhanced benefits such as larger payouts and children’s cover.

• Royal London – All Royal London life insurance policies include terminal illness cover. Critical illness cover can be added, and other benefits tailored, through its Personal Menu Plan, which allows you to customise your policy.

If you want to explore the best providers for terminal or critical illness cover, it is advisable to speak with an experienced insurance adviser. They can compare the options for you and help identify the most suitable policy for your needs.

Frequently Asked Questions