Does life insurance cover critical illness?

It's possible to add critical illness cover to most term life insurance policies.

Whilst it comes at an additional cost, this extra layer of protection will provide a lump sum pay out if you're diagnosed with a life-changing, but not terminal, illness detailed within your policy.

Generically, life insurance won't cover you for diagnosis of critical illness unless you have opted for this further level of protection.

At Reassured, we can arrange life insurance with critical illness cover from as little as 33p-a-day º .

Simply get in touch for your free quotes and protect yourself and loved ones whether you pass away or are diagnosed with a life-changing condition.

Compare Life Insurance with Critical Illness Quotes »

How long does a critical illness claim take?

Unlike life insurance claims, critical illness claims require you to provide medical evidence of your condition. Therefore, a claim can take slightly longer - usually around 8 weeks.

When diagnosed with a critical illness, you should contact your insurance provider as soon as possible.

They'll require you to provide information regarding the new critical illness to assess whether it fits their claims criteria.

Once your claim has been assessed, payment will be made directly to your bank account approximately 8 weeks after first filing the claim[1].

In some instances, this can take longer if further information/investigation regarding your condition is required.

Upon discussing your initial claim, your insurance provider will be able to provide you with a more accurate timescale of when the claim is likely to be paid.

Critical illness claim time limit

A critical illness claim can be made from the date of diagnosis.

To ensure the best chances of a critical illness claim being accepted, you should file your claim as soon as possible or arrange for a loved one to contact your provider on your behalf to inform them of the circumstances.

Most providers will require you to survive a minimum of 14 days from diagnosis before a critical illness payment will be issued.

How much does critical illness cover pay out?

Typically, critical illness cover will pay out the full sum assured as stated on your life insurance policy.

Therefore, the same amount will be received whether you were to contract a life-changing illness or were to pass away.

However, in some instances, providers will only pay out a percentage of the sum assured dependant on the severity of the diagnosed illness.

Once a critical illness claim has been paid, your life insurance will expire and there'll be no further pay out if you were to pass away.

How much critical illness cover do I need calculator.

Enter your financial commitments to understand the level of cover you require.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk
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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk
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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk
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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk
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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org
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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk
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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net
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Critical illness pay out rates

The average critical illness pay out in the UK is £68,354[2].

Figures from the ABI show that 90.5% of all critical illness claims were successful[2], suggesting the likelihood of a claim being accepted is high.

Critical illness claim rejected

There are two main instances when a critical illness claim may be rejected. These are:

  1. Non-disclosure
  2. Uncovered illness

Non-disclosure

When arranging critical illness cover you'll be required to provide details of your current medical wellbeing.

It can be tempting to withhold unfavourable information during the application process as a means of securing more favourable premiums.

However, certain pre-existing conditions can lead to exclusions within your cover, for example, hypertension may result in related illnesses such as heart attack or stroke being excluded from your cover.

If when a claim is processed it's discovered that you had an existing, undisclosed medical condition at application, a claim may be rejected.

Uncovered illnesses

The list of illnesses covered by critical illness cover will vary between insurers.

Therefore, when arranging your cover, it's essential to be aware of exactly what it is you're protected against.

If you were to fall ill with a life-changing illness which isn’t covered in your policy, a claim will be denied.

Obtaining life insurance with critical illness cover

As with standalone life insurance, the cost and cover of a combined policy incorporating critical illness cover can vary significantly between providers.

At Reassured, we can provide you with all the information and quotes you need to make an informed decision.

Contact our award-winning team today for your free quotes.

Compare Life Insurance with Critical Illness »

Sources:

[1] https://moneytothemasses.com/quick-savings/insurance-2/life-insurance/critical-illness-claims-explained

[2] https://www.abi.org.uk/news/news-articles/2024/9/protection-insurers-pay-out-record-7.34-billion-to-support-individuals-and-families/

[3] https://www.financial-ombudsman.org.uk/businesses/complaints-deal/investments/critical-illness-cover

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