Critical illness cover can be set up on a very similar basis to Life Insurance, but it pays out on diagnosis of certain illnesses. Different insurers will offer varying degrees of cover and some will pay out a smaller percentage of the plan for less severe illnesses.

There are a few different ways that cover can be set up.
  • A decreasing lump sum will pay out less and less over time. People usually choose this option to cover the remaining balance on a mortgage which will be reducing as time goes on. Some insurers offer a guarantee that this will be cleared so long as premiums are maintained and the mortgage stays below a certain interest rate.

  • A monthly income If you want your family to receive a monthly income for a period of time rather than a lump sum. You can opt for the amount to be level or increasing.

  • A level lump sum will pay out the same fixed amount no matter when the claim is made

  • An increasing lump sum grows by the rate you’ve chosen, can be a set amount or in line with RPI depending on the insurer.

Single or Joint Policy

For a couple you can take single or joint life policies. With single life cover you each have your own plan so if one policy is claimed upon the other remains in force. So if you were both to die there would be two pay outs.

With a joint life plan you can insure yourself and your partner together and the policy will pay out just once, when the first person died.

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