Critical illness cover

But because of its potential emotional, physical and financial impact, it’s an area of financial planning that shouldn’t be ignored – especially if you have children or other people who are dependent on you for their standard of living.

Critical illness cover pays out a tax-free lump sum if you’re diagnosed with a specified illness within the policy term. There’s a wide range of insurance policies available, from very well-known UK providers.

The cost of critical illness cover will depend on a number of factors, including your health, age, job and lifestyle – and the level of cover you’re looking for. You might also want a policy that comes with fixed premiums so you know how much you’ll be paying each month, rather than a plan where the premiums are ‘reviewable’ and could therefore increase over time. 

The type of illnesses covered are typically very serious or debilitating conditions likes stroke and heart attack, and diseases like cancer and Parkinson’s. Before you take out a policy, it’s important to read the terms – or, better still, have an independent financial planner check it for you. 

The obvious benefit of critical illness cover is the lump sum payout you will receive. You might use it to pay off your mortgage, cover everyday expenses, or you may need to make changes to your home. It could also help pay for treatment that’s not available on the NHS, or a holiday to support your recuperation.

Whichever type of product you take out, you should check if you have any existing cover. Some employers offer critical illness cover, alongside a death-in-service policy, as part of their employee benefits, for example.