Life insurance vs critical illness

If you can't work due to a serious illness, life insurance won't be any help – but critical illness cover could be the answer.

There are two main types of insurance that people use to protect themselves and their loved ones – life insurance and critical illness insurance. Both have their own benefits and drawbacks, so it’s important to understand the difference between the two before deciding which is best for you.

Looking for a critical illness provider to cover you? Read our review of the UK's best life insurance companies for Critical Illness Cover.

In this short article:

• The basics of life insurance and critical illness insurance
• The similarities and differences between life insurance and critical illness insurance

The basics of life insurance and critical illness insurance

Life insurance pays out a lump sum if you die within the policy term. This can be used to help your loved ones cover any debts or expenses you leave behind.

By contrast, critical illness insurance pays out a lump sum if you’re diagnosed with a specified critical illness, such as cancer or heart disease. This can be used to help cover the cost of treatment or make up for lost income if you’re unable to work.

How do the costs compare? One of the main benefits of life insurance is that it’s relatively cheap and easy to get. The main drawback is that it only pays out if you die, so it won’t help you if you’re diagnosed with a critical illness.

Critical illness insurance is typically more expensive than life insurance, but it can provide peace of mind knowing that you’re covered if you’re diagnosed with a critical illness. Read more here.

What’s best for you? Well, the answer depends on your individual circumstances. If you’re worried about the cost of treatment for a critical illness, then critical illness insurance may be the best option for you. If you’re concerned about your loved ones being left with debt if you die, then life insurance may be the better choice.

The good news is that there is nothing to stop you getting both. In fact, some companies, including Aviva, give you the option to add critical illness cover when you buy a life insurance policy.

The similarities and differences between life insurance and critical illness insurance

When it comes to life insurance and critical illness insurance, there are both similarities and differences.

Both types of insurance can provide financial protection for you and your family.

However, the key differences to be aware of relate to the conditions under which the policies will pay out: life insurance only pays out if you pass away, while critical illness insurance only pays out if you become seriously ill.

We've also written about income protection and critical illness cover.