Critical illness insurance, otherwise known as critical illness cover or a dread disease policy, is an insurance product in which the insurer is contracted to typically make a lump sum cash payment should the claimant either die due to certain circumstances or contract a critical/life-threatening condition from a predefined list of illnesses. There are three main types of critical illness policies:
Standard Critical Illness
A standalone critical illness insurance policy will pay out a lump sum if you get a serious illness listed in the policy. Critical illness insurance is often bought with life insurance.
Combined Life & Critical Illness
This type of insurance pays out a lump sum if you die or if you get a critical illness. You’ll usually get one payout, so if you claim for critical illness your life insurance cover will end..
Mortgage Protection & Critical Illness Cover
With this type of product, you get enough life insurance and critical illness insurance to cover your mortgage. If you have a repayment mortgage then you can choose to get insurance which automatically decreases like your outstanding mortgage debt.