Income protection
vs critical illness

Income protection (IP) and critical illness cover (CIC) are both policies that can be taken out to provide an extra safety net of cover.

An income protection policy and a life insurance policy can be taken out simultaneously to provide cover during your working life, as well as protecting your family after your passing.

Whereas critical illness cover can be added to a life insurance policy to protect against serious illness for an additional fee, with some providers also offering standalone policies.

One isn’t necessarily better than the other and the option that’s best for you will depend on your unique needs and circumstances.

Income protection is a type of insurance policy that will pay out to you to help replace lost income if you’re left unable to work due to illness or injury.

As we’re more likely to fall ill than pass away during our working life, income protection can provide essential financial support while you’re out of work.

The amount paid out to you won’t directly mirror your salary. Instead, it will be a percentage of your usual income, (often up to 70%).

Payments will commence once your deferred period has come to an end (your deferred period is the period of time in between your first sick day and when your payments begin, this is specified at the point of application. You can read our full income protection deferred period guide to find out more).

Your payments will then continue until you return to work, the payment period comes to an end, your policy expires, or you retire (whichever happens first).

Why not contact Reassured Advice to compare income protection policies from all of the UK’s leading providers?

An income protection policy will cover you for accident and sickness.

Income protection offers more flexibility than critical illness cover as you’ll be able to claim for any illness or injury that leaves you unable to work for a prolonged period of time.

However, you won’t be covered for any pre-existing illnesses, these are conditions that are present at the point of application and will need to be declared to the provider.

The main benefit of income protection is that it will pay out to you to help replace lost income while you’re unable to work.

This can be especially beneficial for those who are self-employed or those who don’t receive sick pay from an employer, as long-term income protection can cover you up until retirement.

The payments received from an income protection policy can provide the necessary finances for you and your loved ones to continue your current lifestyle with minimal financial disruption.

This also allows you to avoid having to dip into any savings you may have been saving for something else.

Speak to Reassured Advice to find out everything you need to know about income protection and obtain free and personalised quotes.

Unlike critical illness cover, with income protection you don’t choose an overall sum assured.

Instead, you choose your monthly benefit amount which is calculated using a percentage of your usual income plus any other sources of income available to you. So for example you could choose a monthly benefit amount of 50% of your usual income.

Typically, providers will pay out up to a maximum of 70% of your income, but this can vary depending on who you secure cover with.

For this reason, it’s wise to shop around and compare multiple quotes to find the provider who offers to pay out the most.

You can use the calculator below to input some common financial commitments to get an understanding of how much cover you’re likely to need.

According to research from HSE, over 38 million working days were lost as a result of work-related ill health and non-fatal workplace injuries in 2019/20^[1].

This highlights the need to have some form of protection in place to make sure you wouldn’t struggle financially if you were left unable to work.

Although income protection won’t replace all of your lost income, it can provide crucial financial support by enabling you to keep up with essential financial commitments.

If you’re not sure whether income protection is the right choice for you, why not speak to a friendly member of the Reassured Advice team?

No, income protection will not pay out to you if you pass away.

An income protection policy will only pay out to you if you become unable to work due to sickness or accident.

If looking for protection for your loved ones in case of your death, you may want to consider family life insurance.

Hopefully this article has given you a better understanding about income protection vs critical illness cover.

Which option is right for you will depend on various personal factors such as your lifestyle, what you want to protect and your available budget.

Those who’re self-employed and/or do not receive sick pay from an employer, may wish to secure income protection as a long term policy can provide protection for the rest of your working life, providing peace of mind.

Those who receive sick pay or have other forms of finance available may be more suited to critical illness cover as the lump sum pay out can help to top up any other forms of finance.

Speaking to an expert is always the best idea if you’re unsure about which cover option is right for you.

Why not speak to the Reassured Advice team to find out everything you need to know about income protection and critical illness cover?

[1] https://www.hse.gov.uk/statistics/dayslost.htm