Glossary · UK
What is Critical Illness Cover?
An insurance policy that pays a tax-free lump sum if you are diagnosed with a serious illness specified in the policy.
Full Definition
Critical Illness Cover is a protection insurance policy that pays out a one-off, tax-free lump sum if you are diagnosed with one of the specific serious conditions listed in the policy, such as certain cancers, heart attack or stroke. It is often bought alongside life insurance or a mortgage, and the payout can be used to clear debt, replace lost income or fund treatment and adaptations. Cover is usually arranged for a fixed term and a fixed sum assured, with premiums based on age, health, smoker status and the conditions covered. Crucially, only the defined illnesses meeting the policy's severity definitions trigger a claim, so reading the conditions list and any exclusions matters. Personal policies are generally paid from after-tax income and the benefit is not taxable. It is distinct from income protection, which pays a regular income if you cannot work, and from life cover, which pays out on death. Many people use it to protect mortgage repayments against the financial shock of serious illness.