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Critical Illness Insurance

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Critical Illness Insurance (CII) pays out on the diagnosis of certain specified critical illnesses.



Most policies will pay out following heart disease, a stroke, renal failure, cancer, paralysis, or a major organ transplant and coronary artery bypass surgery.


How does critical illness insurance work?


The money is usually paid out in a lump sum and is tax-free, and maximum benefit varies from about £100,000 to £250,000.

It is usually paid out within 28 days of diagnosis. Single people need critical illness insurance to prevent them becoming dependent on friends and family.

Dual-income couples need it to prevent them suffering a financial blow should one partner have to stop work. But cover is not cheap, so it pays to shop around.

You can only claim once on a critical illness insurance policy.


  • Do not buy a critical illness insurance policy purely on the basis of cost.
  • Ensure that the insurance company supplying your policy is financially secure.
  • Check that permanent disability cover is covered by your policy.
  • Check that the insurance company is a number of an ombudsman scheme.


Ten things to consider before buying critical illness insurance cover:

  1. Premium How competitive is the price you are paying?
  2. Employee benefits Find out whether your employer offers critical illness insurance as a benefit.
  3. Guaranteed rates Your premiums might seem cheap today but will they stay that way?
  4. Life cover Most critical illness insurance policies include life cover free of charge. Does yours?
  5. Number of conditions covered Make sure you read exactly what you are covered for. Some policies cover just a few conditions, some cover nearly 40. But how many are you covered for? And does your insurer hold the right to change them or are they fixed?
  6. Children’s cover Now one of the highest areas of claims, but not all policies automatically cover your children. Does yours?
  7. Occupation class Are you insured if you cannot do you own job or if you cannot do somebody else’s?
  8. Amount of cover Do you have enough cover? Do you have too much?
  9. Length of term Are you covered for long enough? What will you do when your cover runs out?
  10. Trusts Critical Illness Cover often comes with life cover included. If the policy is not written in a trust 40% of the pay out could go to the tax man. Is your policy in trust?

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