Critical Illness Cover, or “CIC”, is a protection policy that will pay out a tax-free lump sum if you are diagnosed with a specified illness during the term of the policy.
The money paid out from a critical illness policy (the sum assured) can be used for whatever purpose you like, such as paying for medical treatments, replacing income lost as a result of your illness, paying off your mortgage, or enjoying a few holidays. The sum assured and length of term can be tailored to suit your needs. Some insurers offer terms of up to 50 years, and cover amounts can be in excess of £1m.
All critical illness policies cover the following illnesses, providing they are of a certain specified severity:
Cancer (1 in 2 chance of diagnosis for people born after 1960)
Heart Attack (545 people per day are admitted to a UK hospital due to a heart attack)
Stroke (causes around 38,000 deaths in the UK each year)
Aside from these 3 main illnesses, most policies will cover anywhere between 30 to 60 core critical illnesses. This is completely dependent upon which insurer is chosen to provide the policy, and it is important to be able to identify the differences and benefits presented by the abundance of policies available.
Aside from the main critical illness benefit provided by this form of protection, the majority of insurers also offer extra benefits with their policies, at either no or low extra cost. Typical side benefits can include some of the following:
Children’s critical illness cover; this will pay out in the event that one of your children (or future children) is diagnosed with a defined illness. It may even cover your child’s hospital costs, or childcare costs if you are ill and cannot care for them.
Terminal Illness cover; this will pay out if you are diagnosed with an illness and your life expectancy is less than 12 months, regardless of whether you exceed this expectancy or not.
Additional critical illness cover; this will pay out a reduced benefit amount if you are diagnosed with a specified “less severe” illness. This often includes conditions such as aneurysms, partial blindness or third-degree burns.
Policies will only ever pay out the main critical illness sum assured once, the policy will end once this benefit has been paid. Some of the side benefits listed above can pay out multiple times during the policy term without reducing the main benefit amount.
Insurers will require that you survive for a certain period of time following your critical illness diagnosis; this is often between 14 and 28 days. This means that if you do not survive for the requisite length of time, your critical illness claim will not be paid.
In order to overcome the above issue, it is very common practice for life cover to be taken out alongside critical illness cover. This way, if the critical illness policy did not pay out because the survival period was not met, the life cover would pay out instead in the event of your death. The benefit of including a life cover option will often far outweigh the minimal extra cost incurred, and some insurers will even include life cover at no extra cost.
The premiums that you will pay for critical illness protection are predominantly affected by your age and state of health. Other factors can affect the cost of both critical illness and life cover, such as taking part in dangerous hobbies, or your lifestyle habits. A longer policy term or larger sum assured will also increase the cost of a policy.
It is vitally important when applying for critical illness cover (or indeed any protection policy), that any forms and health questionnaires are completed as honestly and accurately as possible. This will give you the best chance of making a successful claim on the policy, and therefore receiving the money that you would be entitled to.
Most critical illness policies do not acquire a monetary surrender value, and do not have a cash-in value at any time throughout their term. This means that, as long as a successful claim isn’t made during the policy term, it will simply expire without paying out any money. Although this is somewhat anti-climactic, you can live on in the knowledge that you were fortunate enough to not have been critically ill during that time. A small price to pay?!
Some statistics from the Association of British Insurers – 2017 
 - https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/life-cover/critical-illness-insurance/
 - https://www.cancerresearchuk.org/health-professional/cancer-statistics/risk/lifetime-risk#heading-Zero
 - https://www.bhf.org.uk/what-we-do/our-research/heart-statistics
 - https://www.abi.org.uk/news/news-articles/2018/04/protection-insurers-pay-out-record-breaking-5-billion-in-claims/