Is critical illness cover the same as terminal illness?

No, critical illness cover and terminal illness cover are not the same.

When looking at life insurance you’ll often see the terms terminal illness cover and critical illness cover interchangeably used. However, they're very different.

Both types of cover can provide an additional layer of protection on top of your life insurance policy, but the protection they provide isn’t the same.

At Reassured, all term policies taken out through us come with terminal illness cover as standard and critical illness cover can be added for an additional cost.

It’s possible to take out critical illness cover as a standalone policy with some insurers, but this isn’t available through Reassured.

So, what are you covered for and what’s the difference between the two?

Read on to find out everything you need to know about terminal illness vs critical illness…

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Whats the difference between terminal illness cover and critical illness cover?

There are some key differences between terminal illness cover and critical illness cover.

Terminal illness cover Critical illness cover
Comes as standard with a term life insurance policy at no extra cost Can be added to a life insurance policy for an additional cost
A claim can be made upon being diagnosed with a life threatening illness (during the policy term) that is predicted to result in death within 12 months Can be purchased as a standalone product from some providers (not available through Reassured)
A claim can be made upon being diagnosed with a life threatening illness that is predicted to result in death within 12 months Will pay out upon diagnosis of a serious illness listed in policy (during the policy term)
Once a claim has been made, your cover will expire (including life insurance) Once a claim has been made, your cover will expire (when added to a life insurance policy, it will only pay out once for either critical illness or when you pass away)
Life insurance with terminal illness cover from 20p a day† through Reassured Life insurance with critical illness cover from 33p a dayº through Reassured


However, the similarity between the two is that a pay out can be used to ease the financial stress that may come along with being seriously ill.

Depending on your pay out amount, the funds could be used to:

  • Pay off the mortgage (to protect your family home)
  • Cover medical treatment/bills
  • Take care of other large debts
  • Make adaptions to your home
  • Ensure financial affairs are in order
  • Pay for carers

How much critical illness cover do I need calculator.

Enter your financial commitments to understand the level of cover you require.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk
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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk
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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk
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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk
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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org
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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk
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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net
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Terminal illness cover explained

As discussed, terminal illness cover comes as standard with all term life insurance policies taken out through Reassured.

This type of cover allows you to make an early claim on your life insurance policy if you’re diagnosed with a life-threatening illness and predicted to pass away within 12 months.

The pay out can be used to help pay for private medical treatment, make adaptions to your home or give you peace of mind that your financial affairs will be in order.

Unfortunately, terminal illness can't be purchased as a standalone product.

What does terminal illness mean?

A terminal illness, in regards to life insurance, refers to a life-threatening illness that will result in death within 12 months.

List of terminal illnesses

The list of terminal illnesses covered will vary depending on the provider but, typically terminal illness cover will include:

Terminal illness pros and cons

Terminal illness cover can be extremely beneficial.

If you were to be diagnosed with a life-threatening illness, this could have huge implications for your loved ones.

Terminal illness cover can help to eliminate financial stress that might come along during this time by providing an early pay out from your life insurance policy.

However, it's important to know that once you have made a terminal illness claim, your life cover will expire.

PROs CONs
Free of charge with life insurance policy Once claim has been made, policy will expire (including life insurance)
Can make an early claim on your life insurance policy  
Pay out can help to relieve financial stress  
Can be used to help pay medical bills and ensure affairs are in order  
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Critical illness cover explained

Critical illness cover can be added to a life insurance policy (combined cover) for an additional fee or bought as a standalone product from some providers.

It’ll provide a lump sum pay out if you’re diagnosed with a serious illness that’s listed in your policy.

When purchased as a combined policy, critical illness cover will become part of your life insurance policy and you’ll only pay one premium.

What is classed as a critical illness?

Typically a critical illness refers to a specified serious illness. This can include:

Each insurer will have a list of illnesses that they deem to be critical, so illnesses covered under critical illness cover will differ between providers.

Definitions of illnesses will also differ between insurers.

Critical illness pros and cons

When diagnosed with a serious illness, you may become too ill to work.

This can cause a financial strain on your family at an already stressful time.

A pay out from a critical illness claim can help to cover day to day living expenses for your family, as well as help to pay off any medical fees and make necessary adaptions to your home.

However, similar to term-based life insurance, you'll only be protected for a specific time period. This will be agreed when you take your policy out.

PROs CONs
Additional cover in case you fall ill and are unable to work Comes at an additional cost
Pay out can be used to help cover any large expenses Only protected for a specified period of time
Making a critical illness claim wont affect your life insurance policy if purchased as a standalone product Upper age limits will apply, this is usually age 70 but may vary depending on the insurer

Critical illness cover without life insurance

The main difference between terminal illness cover and critical illness cover is that critical illness cover can be bought as a standalone product with some insurers.

Unlike terminal illness, you don’t need to purchase a life insurance policy to benefit from critical illness cover.

Critical illness cover can be your only form of protection or it can run alongside your life insurance policy.

Although having two separate policies may use more of your budget, it provides an opportunity for two separate pay outs.

At Reassured, we can help you arrange life insurance on its own or life insurance with critical illness cover, but we can’t arrange critical illness cover as a standalone policy.

Making a claim

Both claims can be made upon the diagnosis of a serious illness, although the extent of the illness will affect which cover you make a claim on.

Terminal diagnosis

Upon the diagnosis of a terminal illness (if you're predicted to pass away within 12 months) you can make an early claim on your life insurance policy.

It’s likely your insurer will need medical proof to confirm your condition in order to process the claim.

In some instances, they may ask for further evidence.

Once you’ve made a terminal illness claim, your loved ones won’t be able to make a claim on your life insurance policy when you passed away (as the sum assured will have already been paid out).

Critical illness diagnosis

If you’re diagnosed with a serious illness and it meets the definitions outlined in your policy, you can make a critical illness cover claim.

Similarly, you may need to provide medical proof to the insurer.

If you have combined life and critical illness cover, making a critical illness claim may impact your life insurance depending on the claim amount. 

However, if you have a standalone critical illness policy in addition to a separate life insurance policy, the critical illness claim won't affect your life insurance policy and a claim can still be made on this.

To make a critical or terminal illness claim, you’ll need to contact your insurer.

Do I need both?

Whether you need both forms of cover will depend on your own personal needs.

Terminal illness comes as standard with term life insurance policies purchased through Reassured, so you’ll benefit from this additional cover simply by taking out this type of policy.

Whether you want to add critical illness to your policy will depend on what you want to protect and your budget.

If your circumstances change later on down the line and you decide you would benefit from having critical illness cover in place, you could purchase a standalone policy at a later date.

Please note, standalone critical illness cover isn’t available through our broker service

Compare quotes to secure the right cover

As stated above, whether you need critical illness cover on top of a life insurance policy with terminal illness cover will depend on your needs and budget.

Having both forms of cover in place can be extremely beneficial to your loved ones by providing additional protection if the worst were to happen.

By speaking with an award-winning broker, such as Reassured, you can gather all the information you need so you can make an informed decision on what’s best for you.

What’s more, we don’t charge a fee for our award-winning service.

Get in touch to find the right cover, at the right price.

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