Guides & Info

Income Protection vs Critical Illness Cover

Income Protection vs Critical Illness Cover

Not being able to work due to suffering a long-term Critical illness or a significant injury. Not knowing when you might be able to return to work is a worrying thought for all of us. However, what if this concern became a reality? Could you still cope financially? Would you be able to pay your mortgage and other household outgoings? More importantly, if your family rely on your monthly income. Will they be able to help you recover from injury/illness without worrying about the loss of income.

By planning for the future with a financial safety net can help you to protect yourself and your family against such risks. By using a range of Insurance protection products designed to help in difficult circumstances if you are unable to work due to illness or injury. The two main types of protection available are Income Protection Insurance and Critical Illness Cover.

In today’s post we take a look at the key differences between Income Protection and Critical Illness protection policies. Including how you can get both policy types of cover together.

What’s The Difference Between Income Protection & Critical Illness?

Can I Have Income Protection And Critical Illness Cover Combined?

Compare Policies With Protect Income Insurance

Income Protection vs Critical Illness Cover for you

Are Income Protection & Critical Illness Different?

Many people often get confused between the many different long term protection policies available. The key differences between Critical Illness Cover and Income Protection Insurance are very subtle. Because both types of protection have a few of crossover features.

Because both policy types have been designed to provide financial assistance due to an unexpected illness or injury. Without restrictions on the policyholder what they use a claim payment for. It can be very easy to confuse Income Protection and Critical Illness Cover.

However, there are a number of very important key differences between Income Protection and Critical Illness Cover policies, which include:

How the money is paid to policyholders when a claim is made

The amount of money paid to a policyholder on a successful claim

Different types of illnesses or injuries protected by each policy type

How many claims can be made against a policy?

How A Claim Is Paid To Policyholders

Critical illness cover: If you need to make a claim against a Critical Illness Cover policy. Either a combined policy (Life Insurance with Critical Illness) or a standalone policy. You can either receive a lump sum payment or choose a monthly income, also known as family income benefit. Many people who have purchased Critical Illness cover use it as a safety net. To either allow them to either pay off a large debt, like a mortgage or ongoing medical treatment. The key choice is left to the policyholder to decide on how they wish to use a claim payment.

Income Protection: An Income protection policy will pay a regular monthly amount to you. Unlike Critical Illness, this policy type is based on your annual earnings, rather than choosing an insured amount. By claiming on your Income protection policy any claim payments will continue until you go back to work. Or if your illness or injury is so severe that you are unable to return to work. Your claim payments will continue until you retire.

Unlike many long term protection policies, an Income Protection Insurance policy can have a deferred period before any claim payments are made. This is a popular choice for many policyholders because it reduces the monthly premium cost.

A key point to remember when buying an Income Protection policy is to check your employment contract. If you are entitled to full pay from work for a fixed period of time, usually between 3 to 6 months. You can choose to set the deferred period to start when your income will reduce to less than a full monthly wage. By choosing a longer deferment period, the lower your monthly premiums will be.

The Amount Of Money Paid On A Successful Claim

The amount of money that would be paid to a policyholder for a claim on a Critical Illness Cover policy is defined as the sum assured (the amount of protection purchased). You can either receive a claim payment in a lump sum or a monthly payment. Depending on which cover type you choose.

The amount of money that an Income Protection policy would pay on a successful claim is calculated differently. Because it is a percentage of your usual monthly income. Most Income protection insurers will offer a maximum of up to 80% of your gross monthly salary. By using an FCA regulated broker, like Protect Income Insurance who can search all of the insurers. Will help you find the best protection policy for your individual situation.

What Insurance Protects The Most Illnesses Or Injuries?

All Critical Illness Cover Insurance providers have varying lists of illnesses and conditions that are covered under each of their policies. If you are receive a medical diagnosis or suffer an injury that is not covered. You will not be able to make a claim.

Income Protection Insurance providers do offer a broader range of potential claim circumstances relating to illness and injury. Because Income Protection policies relate to your ability to work and are paid on a monthly basis. They are able to cover most types of illnesses and conditions that would leave someone unable to work.

How Many Claims Can I Make?

With all long term protection policies including Critical Illness Cover Insurance. Once a claim has been accepted it will make a claim payment and then lapse. However, as mentioned previously in the post, you can choose either a lump sum payment or a monthly payment. It is very important to remember that if you choose a combined policy (both Life Cover & Critical Illness). The policy will expire leaving no protection in place. 

By choosing an Income Protection Insurance policy, this policy type allows for multiple successful claims to be made during a policy term. It is also worth noting that each claim made against the policy will be dealt with as a new claim and not a continuation of a previous claim.

Can I Combine Critical Illness And Income Protection?

The simple answer is yes, you can have both a Critical Illness Cover policy and Income Protection Insurance. However, they will have to be standalone policies which will mean they offer you comprehensive protection for the future. If you choose to have both policy types, they will protect you and your family against the risk of death, Critical Illness, injury or any condition. Which would leave you unable to work due to illness or injury.

compare critical illness and income protection

Compare Critical Illness & Income Protection

Taking out any long term protection policy should always provide a safety net for the future of your family and peace of mind for you. It is also important to compare the market of providers, by using our free, no obligation quote service. We can help you find the right cover at the right monthly premium cost for your circumstances.

Our specialist team of advisors have years of experience and access all of the Insurance Providers in the UK. By searching all of the providers, Protect Income Insurance can will find the best policy available. Based on value for money and the range of cover available for you.