Critical illness cover explained

It’s never nice to think about becoming ill and the effect that could have on your life. Critical illness cover could provide financial support in the event you’re diagnosed with a severe medical condition listed on your policy and you survive for at least 7 days.

It’s a form of insurance that can help you cover the costs of being out of work, paying bills or making changes to your home to accommodate your illness.

This guide explains how critical illness cover works.

  • A critical illness insurance policy might cover a range of conditions. If you’re diagnosed with one of these during the life of your policy, you could receive a lump sum to help pay for different life expenses. No one hopes to be unwell, but financial support could relieve at least one pressure at a difficult time.

    Policies can differ depending on how long you want the cover to last, how much you’d like to be able to claim for, and the cost of your premiums. The cost can be affected by factors like your age and health at the time you take the policy out.

    Some people may want to use critical illness insurance to cover the following:

    • Living costs while out of work.
    • Covering a partner’s income.
    • Childcare.
    • Mortgage payments.
    • Travel to and from hospital visits.
    • Specialist or additional treatment.
    • Medicine and prescriptions.
    • Utility bills.
    • Changes to your property, such as wheelchair access.
  • A critical illness policy does not cover all forms of illness. You’ll only receive a payout if your condition is covered by the conditions listed in your policy and you live for at least 7 days after diagnosis.

    Insurers may differ in what they include, but your policy is likely to cover:

    • Strokes.
    • Heart attacks.
    • Certain cancers.
    • Organ transplants.
    • Alzheimer’s/dementia.
    • Parkinson’s disease.
    • Multiple sclerosis.
    • Disability through illness or injury.

    Other conditions and ailments may be covered by standard critical illness policies. Or, depending on the insurer, they might be included in more comprehensive enhanced cover options.

    Even if your diagnosis is covered by your policy, there may be circumstances where a claim might not be successful. It’s important to be 100% honest during your application as insurers will refer to your GP for confirmation of diagnosis. They’ll also check if the condition was known about previously.

    Make sure you check all policy details before you choose and purchase the cover that’s right for you.

    More about Lloyds Bank critical illness cover.

    It’s worth remembering that life insurance and critical illness cover products have no cash in value at any time. If no valid claim is made by the end of the policy term, it will end, and you’ll get nothing back. If you don’t pay your premiums on time your cover will stop, your policy will end, and you’ll get nothing back.

  • The price of your policy will depend on:

    • Your age.
    • Your health.
    • Your lifestyle.
    • The policy duration.
    • The level of cover you need.

    As you might expect, the more likely you are to get an illness the more you can expect to pay for your cover. But you are also more likely to make a claim.

    Critical illness cover usually involves a fixed monthly premium that doesn’t change, which can help with budgeting. Think about what costs you’d need to cover should you fall ill. It’s also worth considering what your family would need to maintain their current lifestyle.

  • Getting critical illness cover might not be for everyone, but it’s important to think about how you’d manage your finances if you were to fall ill.

    You may consider getting critical illness cover if:

    • You’re the main or sole breadwinner for you and your loved ones.
    • You don’t have enough in savings to cover costs while you can’t work.
    • You don’t have an employee benefits package, such as long-term illness cover.
    • You only receive statutory sick pay.

    If you have dependants or a partner who couldn’t pay all your monthly expenses alone, critical illness insurance could provide a lifeline.

    You may also like to consider taking out a life insurance policy, which could provide a financial benefit to your loved ones if you were to die unexpectedly.

    At Lloyds Bank, you can purchase life and critical illness together, or independently, helping you to secure the cover you want. Scottish Widows – who are also part of Lloyds Banking Group – arrange our life insurance policies. They are our life insurance experts, helping to protect what matters most for over 200 years. To be eligible for critical illness or life cover, you must be a UK resident and between the age of 18 and 59.

  • You may have come across another policy type called life insurance. This also provides financial protection for your loved ones, but with some important differences:

    • Critical illness policies cover the diagnosis of a critical illness listed on your policy. Life insurance only covers your death.
    • A successful claim on a critical illness policy would result in the policyholder receiving a cash lump sum. It’s then up to them to allocate or spend as they wish. Life insurance, on the other hand, involves a payout being made after the death of the policyholder. The cash lump sum goes to either a joint policyholder or the executor/s of the will. Alternatively, if the life insurance policy has been placed in trust, its trustees or beneficiaries will receive the payout.
    • Life insurance policies may form part of your estate. This means that in the event of your death, they could be subject to tax.

    No-one likes the thought of passing away or leaving their loved ones alone. However, life insurance could help to make sure they’re provided for financially in the event you can’t be there.

    Learn more about life insurance

Frequently asked questions

Frequently asked questions

  • With critical illness cover, you’ll only receive a payout if your consultant medical professional diagnoses you with a condition that is listed in your policy. That means you wouldn’t be able to claim if the illness wasn’t included in your policy. What’s more, critical illness insurance relates to your health when you are alive, so doesn’t cover your death. In addition, in most cases you will need to live for a minimum of 7 days after diagnosis.

  • Many insurers will not cover any pre-existing medical conditions. You may still be able to take out a critical illness policy, but your existing diagnosis would be excluded, meaning you wouldn’t be able to claim for that illness or condition.

  • Every critical illness policy is different and child cover isn’t always included or can be added as extra. It’s a good idea to decide on what you need and then talk to your provider. Make sure to read the terms and conditions of a policy to see whether children are covered, what conditions they are covered for and until what age.

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