Critical Illness Cover (CIC) or Income Protection (IP)?
With so many different insurance products on the market, it can be tricky to work out which product is best suited to you, so let’s break it down.
What is income protection insurance?
If you are unable to work due to an accident or illness which results in a loss of income IP is designed to pay you a regular monthly benefit until you’re able to start work again, or until the end of your policy, you retire or die.
What is Critical Illness Cover?
CIC could pay out a lump sum if you are diagnosed with or undergo a medical procedure for a specified critical illness considered to be in the terms of an insured critical illness policy. The cover will vary between providers, and you must understand the conditions your insurer covers, and their payout conditions.
**Remember we offer a fee-free advised sale on all insurance policies, and make sure our customers know exactly what they are covered for and for how long).
What’s the difference between Income Protection and Critical Illness Cover?
CIC is designed to pay out a one-off lump sum IF you are diagnosed with a critical illness that is covered during the length of your policy.
IP is designed to pay out a monthly benefit if you are off work due to an accident or illness which causes you to lose earnings.
The following table gives a comparison of how the two plans cover differently. Do bear in mind that policies differ depending on the provider, the details below are a guide to give you an idea. Always seek the advice of a professional before making any decisions.
|CIC Covers||CIC does not cover||IP Covers||IP does not cover|
|Only the following conditions:
Cancer (excluding less advanced cases)
Heart attacks (of specified severity)
Stroke (where symptoms last more than 24 hours)
|For example, not all types of cancer are covered.
Advances in medicine and technology mean deem many conditions now as non-critical as they can be considered to be treated effectively.
You need to have permanent symptoms to claim for some illnesses.
Critical Illness Cover is not a savings or investment product and has no cash value unless a valid claim is made within the terms and conditions of the policy
|Will cover a percentage of any earnings lost every month in alignment with your policies terms and conditions.
You are not restricted by the list as with the CIC cover. If you have been professionally diagnosed with a condition that is medically deemed to cause you to not be able to perform your job, and you suffer a loss of earnings, and it is within the terms and conditions of your policy you can claim.
|Does not include unemployment cover and will not pay out if you become unemployed. any monthly benefits should be free from UK Income Tax or National Insurance contributions.
However, the Government may change this tax position at any time, which could affect the monthly benefit your policy pays out. Be aware that there are terms included that impede any payment if you claim certain state benefits.
So, which is best for you?
Well, everyone’s circumstances are different right?
Having a condition that is classed as a CI in the family may sway the vote for you toward CIC. However, the popularity of people taking out IP is on the rise. People have adopted IP as their furlough cushion or safety net if you like
Our best advice. Pick up the phone or drop us a line. We are fee-free brokers, we will not charge you for our advice, and we will make sure you understand exactly what you are covered for.
Article wrote: April 12th, 2022
Please be aware the details of this article are appropriate from the time it was written, therefore any information given after this date may have changed.
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