Critical illness cover is a form of insurance that pays out a tax-free lump sum if you’re diagnosed with a specified illness, or medical condition, during the term of the policy. While it won’t pay you a regular income, the lump sum you receive could help to pay off a mortgage or clear any outstanding debts.

All critical illness insurers cover slightly different medical conditions – the table below shows some of the most common.

How much you can expect to pay for critical illness cover will depend on factors such as your age, whether you smoke or drink, and whether you have any pre-existing medical conditions. The cost of cover will also depend on how much of a lump sum you want the policy to pay out, as well as how long you expect to be working until you reach retirement age.

Critical illness insurance policy terms can be anywhere from two years to 50 years. But if you make an eligible claim during that time (and receive a lump sum payout), your cover will cease automatically, and you won’t be able to claim on the policy again.

Over the past few years, critical illness insurance has become more expensive in relation to the life cover it’s often bundled with. This is because critical illnesses are being diagnosed and treated more often, and more of us are at risk of suffering from a critical illness in our lifetimes. All of this means the insurer is more likely to have to pay out on a policy.

Recently though, new forms of critical illness cover have been introduced that lower the costs of the insurance policy if you make changes to your lifestyle that bring down the likelihood of having to make a claim.

Clients often fear that they will be left high and dry if the critical illness insurance policy they pay for doesn’t pay out when they need it to. However, data suggests the best insurers pay out on more than 90% of critical illness insurance claims.

In those instances where they don’t pay out, it’s usually because either the claim didn’t meet the insurance company’s definition of a life-threatening condition (for example, non-malignant cancers are very treatable now), or the policyholder didn’t disclose an existing medical condition at the outset.

In other words, for most people, there’s no reason to fear that the insurance policy won’t pay out on a genuine claim for a critical illness – provided all of the relevant information has been disclosed before the policy began.

Clients often fear that they will be left high and dry if the critical illness insurance policy they pay for doesn’t pay out when they need it to. However, data suggests the best insurers pay out on more than 90% of critical illness insurance claims.

In those instances where they don’t pay out, it’s usually because either the claim didn’t meet the insurance company’s definition of a life-threatening condition (for example, non-malignant cancers are very treatable now), or the policyholder didn’t disclose an existing medical condition at the outset.

In other words, for most people, there’s no reason to fear that the insurance policy won’t pay out on a genuine claim for a critical illness – provided all of the relevant information has been disclosed before the policy began.

The easiest way to explain how important critical illness insurance is, is share a real-life story. I don’t think the person concerned will mind me explaining what happened.

This 46-year-old family man has a wife and three children. He lives what he would describe as a ‘normal’ lifestyle. He cycles, plays golf and tries to keep active. But his health problems all started suddenly with chronic back pain that lasted over the course of a week. During this time, he was admitted to hospital twice for investigations.

At the end of that week, he was diagnosed with a mycotic aortic aneurysm. This is a rare but life-threatening condition that occurs when a person’s arterial wall becomes infected. He was told it would require surgery involving biological grafts, and potentially a lengthy hospital stay. But the surgery went well, and after several weeks (12 in total) he was able to return home to recuperate. He returned to work after that, but it took him well over a year before he felt something approaching ‘normal’ again.

“How do I know all this? Because that was me, 13 years ago”

One thing I definitely don’t regret is having critical illness cover at the time I was ill. The lump sum paid out to me made a big difference at a time when I needed it.

Firstly, it’s expensive being ill. You may not notice it at the time, but the weeks and weeks of daily visits to a hospital 40-plus miles away will add up, especially if you and your family need to survive on a potentially reduced income.

Mainly though, the lump sum gave me peace of mind. It meant the mortgage and any other outstanding debts could still be paid. And, if the family home or car needed to be modified for wheelchair access after my surgery, the money was there to do it.

The very nature of a critical illness is that it’s likely to have an impact on your lifestyle, often in ways that you can’t plan for. But critical illness cover puts you back in control of your life, allowing you the option to make important changes as you learn to adapt positively to a new way of life.

No-one thinks they will fall ill or become disabled. But the statistics tell a very different story. It’s something that everyone needs to think about and, wherever possible, should plan for.

I take the time to talk to my clients to understand their life goals and financial expectations. That enables me to identify the level of protection they require to help them, and their families withstand the financial repercussions should their health take an unexpected turn for the worse.