Income Protection or Critical Illness explained

Have you thought about taking out an insurance policy in the event of illness or the loss of your job?

In the UK today there are over 500,000 people purchasing Critical Illness Cover, whereas only 100,000 are buying Income Protection. This means that Critical Illness cover is outselling Income Protection by 5 to 1.

Typically, Critical Illness Cover will provide a lump sum of money in the event of a life threatening or debilitating illness while Income Protection pays a regular income if you are unable to work, and will continue until you either can work again or retire. Therefore one policy will settle off the debts while the other pays a regular amount to cover any outgoings.

The reason that people favour Critical Illness Cover is that many people prefer a lump sum payment compared to a regular income. In addition, Income Protection is a much more complicated policy, and harder to underwrite, so Critical Illness Cover is much easier for financial advisors to sell to clients and Critical Illness is often sold as an ‘add on’ to life cover

As mentioned above, each of these policies serve two different purposes, but what many people don’t realise is that these two benefits can complement each other as the cover different risks. However, many people cannot afford both.

Critical Illness Cover was designed over thirty years ago in South Africa for the purpose of allowing people to cover medical expenses. With the NHS in the UK, the policy took shape as something that would be mortgage protection cover to enable people to pay their mortgage in the event of illness. However, many people believe that Income Protection is more comprehensive as it takes into account all of your outgoings. It’s been described as the one policy that everyone should take out but the one policy that most people overlook by Which?

Income Protection is less expensive than Critical Illness Cover, so if you’re on a budget it may be out of your price range even just for mortgage protection. It’s worth talking to a financial advisor as the cost can depend on each individual’s circumstances.

Talk to us at Derngate Wealth Management if you want to talk to us about Critical Illness Cover or Income Protection. It’s essential that you take out sufficient insurance in the event of illness or the loss of your income, especially if you have a family home, children to support and a mortgage.

There are other products available designed to protect you against loss of income. For impartial information about insurance, please visit the website at



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