Updated: July 19, 2019

Critical Illness Cover Payout

Wondering whether your critical illness policy will actually pay if you claim? We'll look at the factors that can affect claim validity, and the amount you receive

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Richard Angliss

Author: Richard Angliss - Finance Expert

Updated: July 19, 2019

Of course, when it comes to buying insurance cover for anything, we’re all different and that means to ensure the best chance of receiving a payout if the worst happens, it makes sense to seek expert advice. If you want to find out a little bit more about critical illness cover payouts this article will help.

When does it pay out?

Critical illness cover provides financial protection if you are diagnosed with a critical illness that stops you, or limits your ability to work. It pays out a lump sum to be used for numerous things. For example, to pay off your mortgage, replace lost income, ensure your family/dependents are looked after financially, or to pay for private medical treatment.

When you’re considering taking out critical illness cover which requires payment of regular monthly or annual premiums, the payout rates (i.e. the likelihood of being able to make a claim) can be an important part of your decision process.

That means it won’t necessarily payout if you’re diagnosed with a terminal illness that will shorten your life expectancy – although in some cases it will. But, critical illness cover will payout if you get an illness that you may recover from, with the right treatment. Each policy will differ slightly depending on the insurer you use.

However, the list of illnesses critical illness cover is designed for, and will most likely payout on, typically includes:

  • Coronary artery bypass
  • Parkinsons
  • Heart valve replacement
  • Angioplasty
  • Early-onset Alzheimers

This isn’t an exhaustive list, but in many cases, if you receive a diagnosis of one of these illnesses, then provided you fully disclosed all your details when taking out your policy, you should receive your critical illness cover payout.

Why might my critical illness cover not payout?

Situations, where your critical illness cover might not payout, can include:

  • Where you didn’t fill out your initial paperwork correctly
  • If you failed to declare an existing illness, that could be considered a contributing factor to the critical illness diagnosis, when you took out the policy

Whenever you take out an insurance policy, such as critical illness cover, seeking expert advice from qualified and experienced professionals, like those we work with, can be the difference between buying the right insurance and receiving a payout if required and having your claim refused due to a minor mistake in the initial application process.

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How much does it payout?

How much your critical illness cover will payout if you’re diagnosed with an illness that’s covered by your policy, depends on how much cover you took out.

Many people take critical illness cover to ensure they can pay for larger and important costs, such as a mortgage.

That means that if you took your critical illness cover out when you bought your home, you might have taken out a policy that covers the entire mortgage. Therefore, your successful claim should payout that amount, meaning the mortgage should be paid off in full.

There are other situations, however, where a smaller payout may be made, due to a variety of factors, including if the illness isn’t considered as severe or debilitating as others. Or, if you use your policy to pay for treatment of a child who falls critically ill, assuming your policy includes critical illness cover for children, as not all do.

What is the average critical illness cover payout?

In many cases, critical illness cover claims are successful and the payout substantial. Figures from the Association of British Insurers (ABI) show that in 2017, 90% of critical illness cover claims were paid out, up from 84% in 2016.

In monetary terms, that was a total of over £1 billion, for an average critical illness cover payout of a little under £68,000 per individual successful claim.

To find out how much critical illness cover you need and to ensure you receive a payout in the event of a critical illness diagnosis, expert advice can help make sure you choose the right cover with the best insurer for your specific situation.

How do insurers make payouts?

If you’re diagnosed with a critical illness and your insurance claim is successful, expect to receive your payout as a single lump sum. How you use that money – to pay off your mortgage in its entirety or to cover regular monthly living costs over a period of time – is up to you.

But, once you receive that payout, your critical illness cover will be at an end. You are able to take out a new policy, but as before, it’s essential that you disclose everything the application requests, including previous claims. If you don’t, you could find any future claims are refused.

Speak with an expert today

If you’re considering your situation and think you might need critical illness cover, expert advice can help make sure you get the right policy for your needs. They can answer all your questions, including when does critical illness cover payout and average critical illness cover payout amounts.

To speak with a fully qualified and experienced critical illness cover advisor like those we work with, get in touch with us today on 0808 189 0463 or by filling in our enquiry form.

Ask a quick question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in critical illness cover. Ask us a question and we'll get the best expert to help.

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Richard Angliss

Richard Angliss

Finance Expert

About the author

Richard Angliss has made a career in financial services which stretches over 40 years.

His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.

For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.

At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.

With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them.  Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.

He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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