Content Writer
Mortgage Advisor & Director
When planning for the unexpected, it’s essential to understand the different types of insurance available. Two key options are critical illness cover and terminal illness protection. Here, we’ll explore the differences between critical illness vs terminal illness cover to help you decide which one, or if both, might suit your needs.
What’s the difference between critical illness and terminal illness cover?
Critical illness cover pays out a lump sum if you’re diagnosed with a serious condition that’s listed in the policy, such as cancer, heart attack, or stroke. Terminal illness cover, on the other hand, pays out if you get diagnosed with any terminal condition (and usually given less than 12 months to live).
Critical illness cover is designed to help you financially while recovering from a serious illness. After receiving a critical illness payout, you may be able to return to a relatively normal life. Terminal illness cover is about supporting you and your family at the end of your life, providing early access to life insurance benefits.
Key features of both insurance types compared
Here’s a brief overview showing what critical illness cover and terminal illness insurance offer, and the key differences between these types of cover:
|
Critical illness cover |
Terminal illness cover |
|
Can be a standalone policy or combined with life insurance |
Usually only combined with life insurance |
|
Lump sum payout |
Lump sum payout |
|
Payouts are a pre-agreed sum based on your level of cover |
Payouts are a pre-agreed sum based on your life cover |
|
Payouts are usually tax-free |
Payouts are usually tax-free |
|
Pays out after diagnosis of an illness or serious condition |
Pays out after diagnosis of a terminal condition |
|
Policy usually ends after a successful claim |
Policy usually ends after a successful claim |
|
Usually a 10-14 day “survival period” waiting for payout after diagnosis |
Usually claims are paid immediately after a confirmed terminal diagnosis |
|
Basic policies with less cover over shorter timeframes can be cheap |
Policies for shorter timeframes are usually cheaper |
|
More conditions covered and larger payouts usually mean higher premiums |
Larger potential payouts usually means higher premiums |
|
Policies can be in place for a fixed period or indefinitely (to a maximum age) |
Policies can be in place for a fixed period or indefinitely (to a maximum age) |
|
Lump sum is useful for paying off a mortgage, paying for treatments, or other big expenses |
Lump sum is useful for helping to prepare your family’s finances for when you’re no longer there |
|
It often costs more to add to a life insurance policy |
Is often included for no extra cost with a life insurance policy |
Does terminal illness cover cost more?
No, terminal illness cover is typically included at no extra cost with most UK life insurance policies. It’s often a standard inclusion with even the most basic and affordable forms of life insurance.
Critical illness cover, however, can come with a separate price tag and be more expensive, as you’re more likely to make a claim. It can be cheaper to get combined life and critical illness cover (that pays out once) compared to separate policies.
Example of cost comparison
Exact costs are going to depend on a variety of personal factors that are unique to you (like whether you’re a smoker, drinker, and how active you are), along with decisions you make around the level of cover you need.
To give you an idea about the cost comparison of terminal illness vs critical illness cover, here’s an example for someone who’s a non-smoker, and looking to get £100,000 of cover lasting 20 years:
|
Age |
Life & terminal illness monthly cost |
Life & critical illness cover monthly cost |
|
25 |
£3 - £6 |
£17 - £21 |
|
35 |
£5 - £7 |
£29 - £39 |
|
45 |
£11 - £13 |
£59 - £82 |
|
55 |
£26 - £37 |
£152 - £188 |
Can you get combined terminal and critical illness cover?
Yes, this is definitely possible. Many insurers offer combined policies that include life insurance with terminal illness cover, plus an optional add-on for critical illness protection. There are also comprehensive whole-of-life policies that may include both critical illness cover and terminal illness as benefits.
If you want terminal and critical illness cover, you could bundle policies together (where only one payout is made, whichever event happens first), or take out separate, standalone policies for life insurance and critical illness cover that could, in theory, pay out twice (once for each event).
Best UK providers for terminal illness cover
The right insurer for your terminal illness or critical illness cover depends on the type of protection you’re looking for, your health, and your budget. But, here are some popular providers offering a terminal illness benefit with life policies:
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Vitality: With Vitality, you get terminal illness cover as standard with all term life insurance plans, and it also offers added health rewards and tools for policyholders who actively manage their wellbeing, which could lead to lower premiums if you stay healthy.
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HSBC: Terminal illness cover is included with HSBC’s life protection, but you can opt for life and critical illness cover, or life and critical illness “plus”, which comes with enhanced benefits like larger payouts and children’s cove.
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Royal London: You get terminal illness cover as standard with Royal London life insurance policies. There’s also the option to include critical illness cover and other benefits within a “Personal Menu Plan”, allowing you to customise things based on your needs.
If you want to get a better idea of the best UK insurance providers with cover for terminal or critical illnesses, it’s worth having a brief discussion with an insurance adviser to see what your options are.
Get a bespoke insurance quotes comparison on Teito
Comparing critical illness and terminal illness cover quotes online can be complex and confusing. There are various ways you can use these policies or combine them to give you complete protection. Several individual factors contribute to a quote, so the right insurer to use will depend on your specific situation.
The right policy (or combination of policies) to use will depend on your circumstances and needs. Our insurance advisers can provide bespoke quotes based on your goals and lifestyle. They can quickly determine the correct type of cover to give you the peace of mind you want, and then find you the best deal.
Ready for a free, no-obligation chat with an advisor specialising in critical illness cover and terminal illness insurance? You can get started here.
FAQs
Yes, most group life insurance policies offered by employers include terminal illness cover at no extra cost. This means your family could receive the payout early if you’re diagnosed with a terminal condition.
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