Critical illness cover (CIC) pays out a tax-free lump sum to policyholders if, during the term of the policy, they are diagnosed with one of a number of specified ‘critical’ illnesses or conditions, such as: cancer, Parkinsons Disease, Multiple Sclerosis, paralysis following a heart attack or stroke, or HIV/AIDS as a result of a blood transfusion.

Exactly which illnesses and conditions the policyholder is covered for will be determined at outset, and will be stipulated in the policy details. The lump sum is usually paid if policyholders survive for a pre-determined period from the date they were first diagnosed with it.

Critical illness policies are often combined with general life assurance policies, and can be written for one person or on a ‘joint life’ basis, i.e. for two people. There is no investment element to a critical illness policy.

How much CIC do I need?
As always, this depends on your individual circumstances and goals. For example, if you are taking out the policy to ensure your home is protected, you clearly need to have a policy big enough to pay off your mortgage.

However, critical illness payments are often used to convert people’s homes after a serious illness, e.g. the addition of a stairlift, wider doors or a downstairs toilet for ease of access.

As always, if you are unsure in any way, seek the help of an experienced adviser.