Critical Illness or Income Protection

Critical illness insurance pays out a lump sum if you're diagnosed with an illness listed in the policy. Income protection insurance is designed to give you an income if you're too ill to work. We've put together the table below to help you decide which one suits you best.



Critical illness insurance

Income protection insurance

What's covered?

Only critical illnesses specified in the policy. Some of these illnesses might have to be judged severe enough for you qualify for a payout.

Most illnesses or disability severe enough to prevent you from working, including stress or back problems.

How are payouts made?

You'll usually get a single lump sum payment directly to you.

After a qualifying period, you'll get monthly payments

Can you claim more than once?

No. This pays out a lump sum

Yes - you can make as many claims as you need during the term of the policy.

Are payouts tax-free?



How is a payout calculated?

You are insured for a certain amount, eg £50,000, which can be paid out at any time during the term of the policy if you make a successful claim.


Payments are a percentage of your earnings - usually a maximum of 50% to 65%.



  • You can choose the amount of cover you want - it's not linked to your income.
  • The lump sum you get if you claim can be big enough to pay off your mortgage, loans, etc.


  • It's especially useful if you're self-employed and do not benefit from an employer's sick pay scheme.
  • Cost effective as it could pay out for many years.


  • It can be expensive. If you opt for cheaper cover you may find many illnesses and permanent disability are not covered.
  • Complex definitions of cover have led to complaints that the products are not easy to understand and exclusions are not fully explained. For example only some types of cancer at certain stages are covered.


  • Premiums can be relatively expensive for the highest levels of cover, but if you increase the amount of time before you get paid out and you don't restrict your policy to your current occupation, then the price falls.
  • Premiums are based on your occupation. If you change jobs you'll need to review the policy.


Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income.