UK critical illness cover

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Introduction -best Critical Illness cover (UK) 

UK Critical Illness cover provides a financial safety net should you be diagnosed with a specific, usually serious, condition or illness.

It’s especially relevant to the contractor sector, and those who run their own limited company. If you can’t work through illness, then you can’t earn. Unlike PAYE employees, with the luxury of receiving either contractual or statutory sick pay, contractors need to implement their own financial safeguards to protect themselves, their loved ones, and their day rate.

Consider the financial consequences if you suffer from a serious illness or injury and cannot work for several months. You still have financial obligations, such as the mortgage and day-to-day household bills. Also, you may potentially require additional funds to pay for treatment, medicine or even modifications to your home. UK Critical Illness cover will provide financial support if you have an unexpected illness or injury.

To get a Critical Illness quote or find out more about critical illness insurance, simply click on the button below

Initial thoughts on UK critical illness cover

Some feel because they are fit and well now, it’s very unlikely that they’d ever need this type of cover. Sadly, the statistics tell a different story.

The truth is that approximately 1 in 5 men, and 1 in 6 women, will suffer a long-term illness in their lifetime. It’s shocking to note that the average age for critical illness claims in the UK is only 47 years old. Plus, according to the FCA’s Thematic Review, up to 40% of the UK’s small to mid-sized businesses may be underinsured.

It’s prudent to give yourself the same protections as your PAYE counterparts. You’ll have peace of mind that should you become ill or you injured, money won’t be a concern and you can focus all your energy on getting better.

How does Contractor Critical Illness cover work? 

When we consider the critical illness definition (UK), the insurance industry defines certain conditions as ‘critical illnesses’. These tend to be serious, sometimes life-threatening, conditions including heart attack, stroke and cancer. A UK critical Illness insurance for contractors’ policy will provide the policyholder with a tax-free payout on the diagnosis of a condition listed on your policy.

Different providers offer differing levels of coverage. However, the golden rule is the more conditions you cover, the higher the monthly payments. It’s always worthwhile to discuss this type of policy with a whole-of-market financial adviser that specialises in the contractor sector.

Under critical illness insurance for contractors, you receive a large, one-off payment if you become ill, allowing you to focus on your recovery rather than money worries. The cash payout is tax-free and you can use it for anything you wish. Commonly claimants use the lump sum to pay their mortgage and regular bills. Furthermore, with serious illness or injury, you may require medical treatment. Also, you may need to make home modifications, such as a ramp or a lift to increase accessibility. Crucially, you’ll have the reassurance that at a difficult time, you won’t need to worry about money.

There is no ‘deferral period’ on a Critical Illness policy, so a claim can be made on a diagnosis. However, depending on the specifics of your policy, you may need to survive for at least 10 to 30 days after your diagnosis before the policy will pay out. Once the policy has paid out, it ends.

What conditions does best Critical Illness insurance cover? 

Each insurer that provides UK Critical Illness cover will list which specific medical conditions they cover. When you search for the best Critical Illness cover, they will also state how severe the condition must be.

Please note that the conditions listed vary by provider. Therefore, it’s essential that you fully understand the scope of the policy you are considering. Most serious conditions should be covered by a Critical Illness policy. Here is an example of which conditions the contractor Critical illness insurance cover (UK) policy might include:

  • Stroke.
  • Heart attack.
  • Different types and stages of cancer.
  • Coronary artery bypass.
  • Kidney failure.
  • Major organ transplant.
  • Multiple sclerosis.
  • Critical illness disability insurance -some insurers will also provide Critical Illness UK cover for a permanent disability due to injury or illness.

The benefits of UK Critical Illness insurance for contractors 

There are many different benefits of a UK Critical Illness insurance policy for UK Contractors. These include:

  • With UK Critical Illness cover you receive a tax-free lump sum payout as soon as you are diagnosed with a critical illness or have an ongoing disability.
  • You can use the payout from the UK Critical Illness cover policy however you wish. For example, a steady income if you are unable to work, help to pay for (even clear) your mortgage, and keep up with your household bills. Moreover, you can also use the payout to make adjustments to your home. For example, this will include a wheelchair ramp or a stairlift.
  • Unlike income protection and relevant life insurance, you will have to pay for contractor critical illness cover out of your post-tax income. However, if you make a successful claim on your Critical Illness insurance (UK) policy, the payment will be tax-free.
  • You can tailor your policy to cover you for a fixed term (e.g., until retirement), or for ‘whole of life’.
  • Additionally, the lump sum you’ll receive will protect your savings as you won’t need to dip into them.
  • A UK Critical Illness cover policy covers you for several different medical conditions.
  • The Critical illness policy gives you peace of mind. Therefore, you will know that whatever the future has in store, you and your family will be financially secure.

Please note, UK Critical Illness cover is not affected by your ability to continue working. Furthermore, it is based on the illness listed on your policy and the severity of the condition. 

What is not covered under Critical Illness insurance (UK)?

It’s important to know that UK Critical Illness cover won’t cover you for all illnesses, and they won’t out if you die. To make a successful claim, your condition must be included on your insurer’s list of definitions of serious illnesses. These vary by insurer and in some cases, the insurer may only pay once your illness hits a certain level of severity. It’s always advisable to speak to a financial adviser to ensure you choose the right policy.

Critical illness cover pre-existing conditions -most insurance providers of UK Critical illness insurance policies will not cover any pre-existing conditions you had before taking out the plan. There are a small number of insurances that may consider covering a previously diagnosed illness, but these are few in number and the premium would reflect the increased risk.

This policy type takes into account your age, medical history, your smoker status, the type of job you do, and the length of cover you require. For example, if you smoke your premiums will be considerably higher.

As a professional with your own contractor limited company, it is vital to consider a contractor critical illness policy. It’s best to speak to a specialist contractor financial adviser if you are looking for UK Critical Illness cover.

To sum up, the best critical illness insurance will provide you with peace of mind if you are diagnosed with a severe illness. As a result, you will have protection for your family.


Besides this guide on the best Critical Illness cover (UK), we have other extensive financial guides for contractors. These cover both Contractor Mortgages, and contractor insurance in general. In addition, we have a guide about Relevant Life Insurance for limited company contractors.

Download their Guide to Insurance for further information on Critical Illness Insurance for directors and contractors.

To get a Critical Illness quote or find out more about UK Critical Illness cover, simply complete the form below. Our trusted partner, Broadbench, will get right back to you with further details.

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Frequently Asked Questions

It is worth noting that there is no cash-in value to critical illness cover UK if you do not use it. Therefore, you will not be able to claim your payments back if you never make a claim.

A critical illness cover UK payout will be either the full sum assured or a percentage based on the severity, if you were to contract an illness covered under the plan.

Each insurer will have a list of what specific medical conditions that they cover. In addition, they will also state how severe the condition must be. Some examples of what the Critical illness insurance policy covers includes are a stroke, a heart attack, different types and stages of cancer, Coronary artery bypass, kidney failure, major organ transplant, multiple sclerosis. Some insurers will also cover permanent disability as a result of injury or illness.

As long as your condition meets the definition within the policy the payout can be immediate. There could also be a slight delay of up to three months in some cases.

Published On: January 4th, 2024 / Categories: Finances, Finances post, Financials /

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