The difference between Critical Illness Cover & Income Protection
Both Income Protection Benefit and Critical Illness Cover are designed to help protect you financially. However, they are quite different products. In this article we’ll explore how Income Protection Benefit and Critical Illness Cover compare so you can make an informed decision before you take out a policy.
What is income protection insurance?
If you’re unable to work due to incapacity caused by illness or injury which results in loss of income, Income Protection Benefit is designed to pay you a regular monthly benefit until you’re able to return to work or until your plan ends, or you retire, or you pass away, whichever happens first.
What is Critical Illness Cover?
Critical Illness Cover could pay out a cash sum if you’re diagnosed with, or undergo a medical procedure for one of the specified critical illnesses that we cover during the length of your policy, and you survive for 14 days from diagnosis. Our Critical Illness Cover can be added to your Life Insurance or Decreasing Life Insurance policy for an extra cost.
The difference lies in the fact that Critical Illness Cover is designed to pay out a one-off cash sum if you're diagnosed with a critical illness that we cover during the length of your policy. In contrast, Income Protection Benefit is designed to pay out a monthly benefit if you're off work due to an illness or injury which results in loss of earnings
What does Income Protection cover?
Income Protection is designed to provide regular monthly payments if you can't work due to illness or accident which results in loss of earnings. It will continue to pay out until you can start working again, you retire, die or the policy comes to an end - whichever is sooner.
You can not claim as soon as you are unable to work, usually insurers will have a 'deferred period' of around 4 weeks and the amount you can claim will not replace the exact amount you were earning - you can usually expect to receive around two-thirds.
What does Income Protection not cover?
As with all insurance policies, limitations and exclusions apply. For example, this plan does not include unemployment cover and will therefore not pay out if you become unemployed. And while any monthly benefits should be free from UK Income Tax or National Insurance contributions, the Government may change this tax position at any time, which could affect the monthly benefit your policy pays out. It is also worth noting that the benefit we pay may affect your claim to some means-tested state benefits
What does Critical Illness cover?
There are a number of specified illnesses that we cover under our Critical Illness Cover. These include:
- Cancer (excluding less advanced cases)
- Heart attacks (of specified severity)
- Stroke (where symptoms last more than 24 hours)
You can find out what illnesses are covered by Critical Illness Cover, as well as full definitions and when you can claim for these illnesses, in our Guide to Critical Illness Cover PDF and Policy Booklet PDF.
While there are many conditions covered by our Critical Illness policy, it’s worth remembering that not every occurrence of an illness will be covered. For example, not all types of cancer are covered. Advances in medicine and tecjnology mean that traditional views of critical illnessess are contantly changing.
Moreover, you need to have permanent symptoms to make a claim for some illnesses. Also,
Critical Illness Cover is not a savings or investment product and has no cash value unless a valid claim is made.
Should I choose Income Protection Benefit or Critical Illness Cover?
Your decision to select Income Protection Benefit or Critical Illness Cover may depend on work and lifestyle factors. You may work in a trade where any injury defined as non-critical could nonetheless cause damage to your livelihood, in which case Income Protection may be suited to your needs. On the other hand, Critical Illness Cover may suffice if you prefer a one-off cash sum on diagnosis of covered conditions which could be used towards paying off a mortgage or help with other everyday living expenses.
You may feel you even have a need for both products, if affordable. Our Income Protection Benefit is only available through a Financial Adviser so they will also be able to help you work out the right option for you.
It's also important to remember that with Legal & General, Critical Illness Cover can only be added when taking out Life Insurance or Decreasing Life Insurance and cannot be taken out on its own.
Get the cover you need today
It can be difficult to decide how to protect yourself and those closest to you, but whether you choose Income Protection Benefit or Critical Illness Cover, you’ll have peace of mind knowing that you have some financial protection in place.