What's the difference between income protection and critical illness cover?

While both policies payout to help protect you against illness, there are many fundamental differences between income protection and critical illness cover.

Understanding these differences is crucial to choosing the right protection for your needs and budget.

Income Protection vs Critical Illness Cover - Key Differences

The fundamental distinction:

Think of it this way: Income protection covers the everyday illnesses that stop you working (slipped disc, mental health issues, broken bones, flu complications). Critical illness covers life-threatening diagnoses that require major lifestyle changes or expensive treatment.

Statistics show you're more likely to need income protection - 1 in 7 workers will be off work for 3+ months due to illness or injury during their career, compared to 1 in 6 people diagnosed with a critical illness in their lifetime.

What does income protection cover vs critical illness?

The conditions covered by income protection and critical illness cover differ dramatically, which is why many people need both types of protection.

Conversely, if you're diagnosed with early-stage cancer and receive the critical illness lump sum (£100,000), but you're still able to work throughout treatment, income protection pays nothing because you haven't lost income.

This is why many financial advisers recommend having both covers if budget allows - they serve completely different purposes.

Real-world claim scenarios

Which do you need - income protection or critical illness?

Choosing between income protection and critical illness depends on your personal circumstances, financial priorities, and existing protection.

Here's how to decide which cover is right for you:

Which cover suits your situation?

Key questions to ask yourself:

• What's my biggest financial risk - losing monthly income or needing a large lump sum?
• Do I have employer sick pay? How long does it last?
• How much savings do I have for emergencies? (3-6 months = consider CIC, less = need IP)
• What are my ongoing monthly commitments? (Mortgage, bills, loans)
• What's my family medical history? (Cancer/heart issues = CIC more relevant)
• What's my occupation risk? (Physical/stressful job = IP more likely needed)
• Do I have dependents relying on my income?
• What debts would I want to clear if diagnosed with serious illness?

The general consensus among financial advisers:

1. Income protection first: Prioritise IP because it's more likely you'll need it, covers everyday illnesses, and protects your biggest asset (earning capacity). This is especially true if you're the main earner, self-employed, or have no sick pay.
2. Add critical illness second: Once you have income protection in place, add critical illness if budget allows. This provides the lump sum for major life changes, paying off debts, or funding private treatment.
3. Consider combined policies: Some insurers offer combined income protection + critical illness at slightly reduced cost vs buying separately. This can be cost-effective if you want both covers.

However, there are exceptions - critical illness might be your priority if you have very generous employer sick pay (6-12 months full salary), significant savings to cover short-term income loss, or a specific concern about life-changing diagnoses rather than everyday illnesses.

Can you have both income protection and critical illness?

Yes, you can have both income protection and critical illness cover - and many financial advisers recommend it as they serve completely different purposes and complement each other perfectly.

Why have both? Here are the key benefits:

• Income protection covers common illnesses (back pain, mental health, injuries) that critical illness doesn't
• Critical illness covers serious diagnoses that may not immediately stop you working (early-stage cancer - you get lump sum before needing time off)
• IP replaces lost earnings month-by-month; CIC provides capital for major life changes
• CIC lump sum can pay for home adaptations, private treatment, or mortgage overpayment while IP covers bills
• Different payout triggers mean double protection in some scenarios (e.g., heart attack pays CIC lump sum AND IP monthly income if off work)
• Comprehensive protection against all illness-related financial risks

How both policies work together in real scenarios:

How both covers complement each other

Cost considerations for having both:

Example combined costs (35-year-old, non-smoker, £35,000 salary):

Combined cost of both covers (35-year-old, non-smoker, £35,000 salary)

Ways to make both covers more affordable:

• Choose longer deferred period on income protection (26 weeks vs 13 weeks saves 30-40%)
• Opt for short-term income protection (2-5 years) instead of full term (saves 40-60%)
• Choose lower critical illness sum (£50,000 vs £100,000 halves the cost)
• Consider combined policies from insurers (Aviva, Legal & General offer bundle discounts)
• Match deferred period to employer sick pay (if you get 6 months, choose 26-week deferred)
• Review both annually - you may be able to switch providers for better rates

The order most financial advisers recommend:

1. Get income protection first: Priority #1 - covers more scenarios and more likely to be needed. Start with this even if you can't afford both.
2. Add critical illness when budget allows: Once IP is in place, add CIC for comprehensive protection against all illness scenarios.
3. Review both annually: Check you're getting best rates and coverage still matches your needs as circumstances change.

Some insurers offer combined policies that bundle income protection and critical illness at a slight discount compared to buying separately. Examples include Aviva Combined Protection and Legal & General's combined cover options.

Compare Both Income Protection & Critical Illness »

Cost comparison: Income protection vs critical illness

Understanding the cost difference between income protection and critical illness cover helps you make an informed decision based on your budget.

Here's how costs typically compare:

Income Protection vs Critical Illness Costs by Age (Non-smoker, good health)

Factors affecting cost for both covers:

Cost factors comparison

Which offers better value for money?

Value comparison example:

Income Protection: £30/month for £2,000/month cover. If off work for 12 months, you receive £24,000. That's 800 months (66 years!) of premiums paid back in one year of claims.

Critical Illness: £40/month for £100,000 cover. If diagnosed with covered condition, you receive £100,000. That's 2,500 months (208 years!) of premiums paid back. However, you're less likely to claim.

Ways to reduce costs for both covers:

• Compare quotes from multiple providers (costs vary 30-50% for same cover)
• Don't smoke or quit smoking (saves 30-100% on premiums)
• Choose appropriate benefit levels (don't over-insure)
• For IP: Choose longer deferred period aligned to sick pay/savings
• For IP: Consider short-term payment period (2-5 years vs full term)
• For CIC: Choose lower sum assured (£50k vs £100k halves cost)
• Buy while young and healthy (premiums lock in at application age)
• Pay annually instead of monthly (saves 5-10% vs monthly payments)

Remember: The cheapest policy isn't always the best value. Consider:

• Claim acceptance rates (higher is better)
• Definition of incapacity (own occupation vs any occupation)
• Conditions covered (especially for critical illness)
• Additional benefits (rehabilitation, partial payments)
• Insurer financial strength (will they be around in 30 years?)
• Customer service and claims handling reputation

Use our free comparison service to get quotes from 50+ UK providers for both income protection and critical illness cover. Our FCA-regulated advisers can help you find the right balance between comprehensive coverage and affordable premiums.

Compare Income Protection & Critical Illness Quotes »