A guide to financial education from The Insurance Surgery: from critical illness to key facts

January 2024 | 11 minutes

With the average age of a first-time buyer rising to 34 years old, a lot of people may not know that much about critical illness cover, until they go to buy their first home.

Yet, by the time you reach 31 years old, you enter a stage where the likelihood of being diagnosed with a critical illness increases. That’s why at The Insurance Surgery, we think it's important that individuals are provided with financial planning education – as it could be one of the most important decisions of your life. Let’s take a closer look at what critical illness cover is and why it’s important.

What is critical illness cover?

Critical illness cover is designed to provide a lump sum payment upon the diagnosis of a severe illness - that is listed in your policy wording. For example, critical illness cover would pay out if you are diagnosed with either (but not limited to) cancer, stroke, heart attack or Parkinson’s etc.

This lump sum could have multiple purposes and can be used for anything you see fit at the time. Including, covering medical expenses, replacing lost income when you can’t work, adapting to lifestyle changes, repaying outstanding debts, or simply to go on holiday. Critical illness cover is a tool that not only eases the financial worry associated with serious health issues or diagnosis but also enables individuals to prioritise their recovery and well-being without added stress about financial matters.

Key facts about critical illness cover:

What is the likelihood of being diagnosed with a critical illness?

As you get older the risk of getting a critical illness increases. The average age of a claim related to open heart surgery is 35, motor neurone disease is 45 and stroke is 501.

What are the top reported critical illnesses?

  1. More than 5 million people in the UK have diabetes - many thousands of them are undiagnosed
  2. There are 1.3 million stroke survivors in the UK2
  3. 1 in 2 will develop some form of cancer in their lifetime3.

Can my savings cover me if I’m diagnosed with a critical illness?

We are a nation of savers, 61% of UK adults save money either every or most, months. However, with the cost-of-living tightening budgets, 34% of adults have either no savings or less than £1000, in a savings account.

Almost two-thirds (65%) of people believe they wouldn’t be able to last three months without borrowing money4.

Critical illness cover is like a savings account that you never want to have to use but will support you when you really need it.

But will my sick pay cover me?

While Statutory Sick Pay (SSP) provides financial safety for individuals unable to work due to illness, it often falls short of adequately supporting a family. Here are a few reasons why:

  • Limited duration:

SSP is payable for a maximum of 28 weeks. In cases of prolonged illness or recovery, this timeframe may not be sufficient to cover the full duration of the health challenge. Families may face financial strain if the recovery period extends beyond the SSP cover.

  • Fixed amount:

The fixed weekly amount of £109.40 may be insufficient to meet the financial needs of a family. From housing costs to daily expenses and unforeseen medical bills, the fixed nature of SSP can create financial gaps, especially when the primary earner in the family is affected.

  • Dependence on employer:

SSP is paid by employers, which means that the availability of this benefit depends on the policies of the specific employer. Individuals in precarious employment situations, such as part-time or gig workers, may not have access to SSP or may receive a reduced amount.

  • Maintaining standard of living:

For families accustomed to a certain standard of living, relying solely on SSP may result in a significant drop in income. This can impact the ability to meet ongoing financial commitments, including mortgage or rent payments, utilities, and educational expenses for children.

  • No cover for self-employed:

Self-employed individuals are not eligible for SSP. This poses a unique challenge for those who run their own businesses or work independently, as they may face a complete loss of income during periods of illness.

Considering these factors, it becomes clear that while SSP provides crucial initial support, it might not maintain a family's financial outgoings during a more extended period of illness 5.

Does critical illness payout?

In 2022, 91.6% of critical illness claims were paid, according to the latest figures from the Association of British Insurers. However, less than one in 10 adults in the UK currently have critical illness cover5.

How much cover do I need?

The amount of cover needed depends on your circumstances, you will most likely have a rough idea of what you would use the money for. You can also take out from £5,000 to £3 million and the lump sum can be used for whatever you need at the time6.

How much does critical illness cover cost?

We’ve provided a few examples below to show the cost, however, we know that everyone is different, and this can change the cost of your monthly premiums. Insurers will base their premiums on several factors including:

  • Your age
  • Weight and health
  • Smoker or non-smoker
  • Medical history
  • Family history
  • Your job
  • Amount of cover and for how long

Let’s look at two examples of customers seeking critical illness cover:

Critical illness insurance example cost #1

Bridget is 35 years old. She is a single mum with two children. She works as a nurse. She wants to buy critical illness insurance with a payout of £100,000. She has no pre-existing medical conditions or family history of critical illness. She doesn’t smoke and is healthy. She chooses a level-term policy over 20 years.

Bridget’s monthly premium is £30.31. She would pay £363.72 per year.

£30.31 per month | £100k payout

Critical illness insurance example cost #2

Robert is 45 years old. He is married. He works as an architect. He wants £150,000 of critical illness cover for 15 years. He has high blood pressure and high cholesterol. Both are controlled by medication. He has a family history of heart disease. He chooses a decreasing term.

Robert’s monthly premiums are £56.40. He would pay £676.80 per year.

£56.40 per month | £150k payout7.

Whatever your circumstances, we are confident that we can find you a suitable critical illness plan. What’s more, with our price promise guarantee, you can feel confident that you won’t find a better price anywhere else.

Ready to consider critical illness cover? Here's a practical checklist:

  1. Understand your risk factors and the likelihood of facing a critical illness based on your age, health and family history.
  1. Discuss with your protection adviser the range of policies available, considering the cover, exclusions, and premium costs.
  1. Evaluate how critical illness cover fits into your budget and overall financial plan.


  • Level Term: the agreed lump sum that is paid out remains the same throughout the duration of the policy, whether it's for 10, 20, or 30 years.
  • Decreasing Term: In a Decreasing Term policy, the lump sum amount decreases over time. This is often associated with mortgage protection as the payout can cover the remaining mortgage in the event of the policyholder's illness that prevents them from working.
  • Income Protection: Income Protection is designed to pay up to 70% of a working individual’s annual income as a tax-free monthly benefit should they be off work due to illness or injury.
  • Premium: The premium is the amount of money that a policyholder pays to the insurance company in exchange for cover. It is typically paid monthly.
  1. Zurich Critical illness data makes astounding reading
  2. BHF Facts and Figures_Nov2023
  3. ABI, Protection insurers pay out £6.85 billion to support individuals and families
  4. Gov.uk – Taking sick leave
  5. UK Savings Statistics
  6. Legal and General, Critical illness cover
  7. The Insurance Surgery, Critical Illness Cover

Your chance to win £150 with The Insurance Surgery!

The Insurance Surgery has a special competition for Alcohol Change UK supporters. When you take out a policy with The Insurance Surgery, you'll automatically be entered into a draw for a chance to win £150. It's their way of saying thank you for prioritising your financial security and the well-being of your loved ones.

T&C’s: The competition ends on Thursday 1st February 2024, and the winner will be announced on Monday 5th February 2024.

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