Content Writer
Former Senior Protection Advisor
When planning for the unexpected, it’s worth understanding the different types of insurance available. Two key options are critical illness cover (CiC) and income protection insurance. Here, we’ll cover the differences between CiC and income protection to help you decide which one (or if both) might suit your needs.
What’s the difference between income protection and critical illness cover?
Critical illness cover provides a lump sum payout if you're diagnosed with a serious illness covered by your policy - such as cancer, heart disease, or a stroke. On the other hand, income protection insurance provides regular monthly payments (usually a percentage of your salary) if you’re unable to work due to illness or injury.
Key features of both insurance types compared
Here’s a brief overview showing what critical illness cover and income protection offer and the key differences between these types of cover:
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Critical illness cover |
Income protection insurance |
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Lump sum payout |
Regular monthly payments |
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Payouts are a pre-agreed sum based on your level of cover |
Payments are based on your income (usually 50% - 70%) |
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Payouts are usually tax-free |
Payments are usually tax-free |
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Pays out after diagnosis of an illness or serious condition |
Pays out if you can’t work due to illness or injury |
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Policy usually ends after a successful claim |
You can usually make multiple claims while the policy is valid |
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Usually a 10-14 day “survival period” waiting for payout after diagnosis |
Pre-agreed waiting time (deferred period) before payments start - usually 4, 8, 13 or 26 weeks |
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Basic policies can be cheap |
Shorter policies with longer deferred periods tend to have lower premiums |
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More comprehensive cover usually means higher premiums |
Longer policies with shorter deferred periods tend to have higher premiums |
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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 or retirement) |
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Lump sum is useful for paying off a mortgage, paying for treatments, or other big expenses |
Regular monthly payments help with living costs like mortgage repayments and food shopping |
Should you get critical illness cover or income protection?
The right type of policy will depend on your lifestyle and needs. Here’s a quick summary of the key areas to think about if you’re comparing critical illness cover and income protection insurance:
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Critical illness cover: This could suit your needs if you want financial support in the form of a lump sum to pay off debts, a mortgage, or fund treatment if you get diagnosed with a serious illness. However, it only pays out once and for pre-defined conditions.
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Income protection insurance: This is better suited if you need regular payments to help with day-to-day expenses while you’re unable to work and recovering from an illness or injury. Income protection can be broader and long-lasting in terms of cover, but the policies tend to be more expensive.
Get your bespoke protection insurance quotes today
Do you need both income protection and critical illness cover?
Critical illness cover and income protection can complement each other well. For example, if you’re diagnosed with a serious illness and can no longer work, your critical illness cover provides a lump sum for major financial obligations, and then your income protection could help with replacing your wage.
Whether you need both depends on how comprehensive you need your overall insurance protection plan to be. If you want to ensure you and your family are covered for every eventuality, it can make sense to use multiple types of insurance to layer your protection like a suit of armour.
Can you combine the two?
While combined critical illness and income protection policies are rare, some specialist insurers may be able to underwrite a bespoke combination policy. Or you could take out separate standalone policies to build the right level of protection. Even if you use different insurers, you can get the best deal for each type of insurance.
An alternative option is adding these benefits to a life insurance policy, for example, as add-ons with a universal whole-of-life policy. Having a quick chat with an insurance advisor is worthwhile because they can explain whether it makes sense to bundle various types of cover together to suit your needs and budget.
Get bespoke insurance quotes online with Teito
You might find it complex and confusing comparing critical illness cover and income protection insurance quotes online. There are various levels of cover and plenty of individual factors go into a quote - like your age, health, lifestyle, whether you’re a smoker, your occupation, and more.
The right policy will depend on your circumstances and needs. Our insurance advisors can quickly provide bespoke quotes based on your circumstances. They can quickly determine the correct type of cover for your situation and then find you the best insurance deal.
Ready for a free, no-obligation chat with an advisor specialising in income protection insurance and critical illness cover? You can get started here.
FAQs
There’s no single best answer for everyone because the correct type of cover will depend on your situation and financial obligations.
A brief discussion about your circumstances with an insurance advisor will allow them to determine what’s most suitable for you between income protection and critical illness cover, or if you need both.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.