What’s the different between life insurance and critical illness?

A life insurance policy pays out to your loved ones after your passing, whereas critical illness cover pays out to you if you’re diagnosed with a specific serious illness.

What is life insurance?

  • A pay out is made to your loved ones if you pass away during the policy term
  • Provides cover for a set period
  • You’ll be covered for all manners of death^
  • Pay out can help loved ones to cover costs such as your funeral, the mortgage and daily living expenses

What is critical illness cover?

  • A pay out is made to you if you’re diagnosed with a serious illness during the policy term
  • Provides cover for a set period
  • You’ll be covered for specified list of conditions
  • Pay out can help to replace lost income while you’re off work and/or pay for any private medical treatment

These policies are similar in that they provide cover for a specified period and provide a tax-free lump sum. However, the difference is that one pays out upon the diagnosis of a serious illness (critical illness cover) and the other pays out upon your passing (life insurance).

But, did you know, you don’t always have to choose between one or the other?

Critical illness cover can be added to a life insurance policy for an additional cost to allow you to benefit from both forms of cover.

Life insurance with critical illness cover is available through Reassured from just 33p-a-day º .

Compare fee-free quotes through our award-winning and FCA-regulated broker service.

Keep reading this comprehensive guide as we cover important topics, such as:

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Do I need life or critical illness insurance?

The option that’s best for you will ultimately depend on your personal circumstances and what you’re looking to cover.

Below is a table of key questions about each policy type to help you establish which might be suitable for your needs:

Key questionsLife insuranceCritical illness cover
What will you be covered for?Provides cover if you were to pass away unexpectedly. All manners of death are coveredProvides cover if you were to fall seriously ill. A specified list of conditions will be covered, such as cancer, stroke and MS
What can the policy help to protect?A life insurance pay out can help to cover funeral costs, the mortgage, additional childcare costs and other family living costsA critical illness cover pay out can help to replace lost income while you’re unable to work and/or pay for private medical treatment
When will it pay out?The policy will pay out if you pass away while your policy is active. This could be during a set term or your whole life (depending on what policy you opt for)The policy will pay out if you’re diagnosed with a listed condition while your policy is active, this will be a set term.
Who is it available toThis can depend on the policy type you take out but typically life insurance is available to those aged 18 - 85This can depend on the insurer, but typically critical illness cover can be available to those aged 18 - 69
Who receives the pay out?Your loved ones (or named beneficiary) will receive the fundsThe funds will be paid to you
How do you pay for cover?You’ll need to pay a monthly premiumYou’ll need to pay a monthly premium
How much does it cost?Available from £5 per month through Reassured † Can be available from £5 per month through other insurers[1]

Remember, you don’t have to choose between one or the other as it’s possible to secure life insurance with critical illness cover.

By securing this form of cover you can provide a comprehensive cover solution.

While we can’t help you compare just critical illness cover, at Reassured we can help you compare both life insurance and life insurance with critical illness cover.

Get in touch for your free and no-obligation quotes.

Is critical illness better than life insurance?

One isn’t necessarily better than the other as each policy provides cover for different circumstances.

Life insurance can be beneficial for:

  • Those with dependents
  • Those who worry about funeral costs being left to loved ones
  • Those with a mortgage
  • Those who want to provide an inheritance

Critical illness cover can be beneficial for:

  • Those with dependents
  • Those who worry about losing income due to being unable to work
  • Those with a mortgage
  • Those who worry about medical costs

Life insurance protects your loved ones should you pass away unexpectedly, helping to minimise any financial strain at an already distressing time.

Critical illness cover can protect you in the event of serious illness, reducing the financial impact of being unable to work and/or allowing you to pay for private medical treatment.

It’s common for both life insurance and critical illness cover to be combined to allow you and your loved ones to benefit from a comprehensive cover solution.

At Reassured we can help you compare life insurance with critical illness cover quotes from some of the UK’s best life insurance companies.

How much life insurance with critical illness cover do you need?

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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Life insurance vs critical illness pros and cons

Life insurance

PROs:

  • Provides loved ones with a financial safety net. Helping them to cover expenses such as your funeral, the mortgage and family living costs
  • There are a variety of policy types available (term-based cover, whole of life insurance, over 50 life insurance) to suit different needs
  • Premiums can be affordable, starting from just £5 per month (depending on policy type and personal circumstances)
  • It can be quick and easy to secure a policy. In fact, it’s now possible to buy life insurance online
  • Policies are often flexible, allowing you to change certain policy details (like your cover amount) to keep up with changing needs

CONs:

  • A pay out might not be guaranteed. If you opt for term based cover your policy will last for a set period and will only pay out if you pass away during this time
  • You could pay more into the policy than it will pay out. If you opt for whole of life insurance or over 50 life insurance, you’ll need to pay premiums for the rest of your life
  • Premium costs are based on your personal circumstances, so if you have a pre-existing medical condition (or another high-risk factor, such as your occupation or hobbies) you may pay more for cover

Critical illness cover

PROs:

  • Provides you with peace of mind that you can keep up with your financial commitments and/or provide for your family if serious illness prevents you from working
  • Cover can easily be added to a term life insurance policy (for an additional cost) to allow you and your loved ones to benefit from both forms of cover
  • Many common conditions are often covered including cancer, heart attack and stroke

CONs:

  • You’ll only be covered for a specified list of conditions (typically this is 30 conditions, but this could be more or less depending on the insurer)
  • Your condition must also meet the insurers specified definition in order for a claim to be accepted
  • Not all insurers offer standalone cover. Meaning if you’re just looking to secure critical illness cover you may have fewer options available
  • If you have any pre-existing medical conditions, these (and any related conditions) will likely be excluded from your cover. This means you won’t be able to claim for these conditions

Speaking to a life insurance expert, such as Reassured, can allow you to obtain all the information you need to make an informed decision about which policy is right for you.

Why not get in touch to speak to one of our friendly and professional team members?

Is critical illness part of life insurance?

Yes, critical illness cover can be part of a life insurance policy.

When you take out a term life insurance policy, you have the option to add critical illness cover for an additional cost in your monthly premium.

In this instance, your policy would allow you to claim if you become seriously ill (with one of the conditions specified in your policy) or your loved ones could claim upon your passing.

It’s important to be aware that once a critical illness claim has been made, cover will expire, and a claim can’t be made upon your passing.

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Can you get critical illness without life insurance?

Yes, some insurers offer standalone critical illness cover policies.

If you’d like your loved ones to benefit from two separate pay outs, you could take out a separate critical illness policy from your life insurance. However, this would require two separate premiums.

Not all insurers offer standalone critical illness cover.

Critical illness cover on its own isn’t available through Reassured, but we can help you compare life insurance with critical illness cover quotes from top UK insurers.

Life insurance vs critical illness cost

Life insurance premiums through Reassured can start from as little as £5 per month.

We don’t sell critical illness cover as a standalone policy. However, looking at other insurers, we have found that critical illness cover can also be purchased from £5 per month[1].

Through Reassured, it’s possible to secure life insurance with critical illness cover from just £10 per month.

With both life insurance and critical illness cover, the exact price that you pay will vary based on your personal circumstances.

During the application process you’ll need to provide the following details in order for insurers to calculate your premium price:

Below are some example quotes using our award-winning broker service.

Cost of life insurance

Quotes are based on a non-smoker, in good health, for a level term policy with a 20 year term with £100,000 of cover:

Age Aviva AIG logo Legal & General
20£3.50£3.78£4.99
25£3.62£4.02£4.99
30£4.51£4.74£5.00
35£6.05£6.12£6.89
40£8.50£8.36£9.82
45£12.20£12.24£14.41
50£19.57£19.02£22.77

Cost of life insurance with critical illness cover

Quotes are based on a non-smoker, in good health, for a level term policy with a 20 year term and £50,000 of cover:

Age Legal & General Aviva LV=
20£8.29£9.26£9.69
25£10.83£11.87£12.63
30£14.65£15.18£18.54
35£19.61£20.36£22.16
40£28.00£28.46£29.68
45£39.82£40.62£46.15
50£58.45£59.42£68.17

Why not use our award-winning and fee free service to compare quotes from top UK insurers?

Want more information on life insurance and critical illness cover average cost? Why not check out the following guides:

Do I need life and critical illness cover for my mortgage?

It’s not a legal requirement to have life insurance or critical illness cover when obtaining a mortgage.

However, it’s often advised by mortgage lenders and financial advisors. This is so there would be adequate funds to continue paying off the mortgage should the unexpected happen.

After your passing your loved ones may struggle to keep up with mortgage costs on a single income. However, a life insurance pay out could allow them to pay off this cost in full and remain in their home.

Similarly, if you were to fall ill and needed to take time off work, it could be hard to keep up with mortgage payments while you’re relying on sick pay. A critical illness cover pay out could allow you to keep up with your payments.

By taking out life insurance with critical illness cover, you could be covered for both circumstances (whichever happens first).

We have a ‘do I need life insurance for a mortgage?’ guide if you require more information on this topic »

Compare life with critical illness cover quotes

Using our award-winning broker service, you can compare both life insurance and life insurance with critical illness cover to find the right option for your needs.

We can also provide you with all the information you need to make a fully informed decision.

Life insurance starts from just 20p-a-day, with life and critical illness cover starting from 33p-a-day.

Why not take the first steps in financially protecting your loved ones and get in touch today?

All quotes are fee-free, personalised and completely without obligation.

Compare Life Insurance with Critical Illness Cover »

Sources:

[1] https://www.lloydsbank.com/life-insurance/critical-illness-cover.html

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