Is serious illness cover worth it?

Critical illness cover offers financial back-up if you get a severe condition or become disabled. Find out the ins and outs and whether it’s right for you.

What is serious illness cover?

It’s insurance that pays out if you get a serious illness covered on your policy.

You choose the amount of cover you want upfront, and a tax-free lump sum is paid out if you get one of the specified conditions.

info icon Other terms for serious illness cover are critical illness and specified illness cover.

How it works

You can choose an amount of cover from €10,000 to €1.4 million, over a term of 5 to 40 years, up to a maximum age of 75.

To remain covered, you must make fixed monthly payments known as guaranteed premiums for the entire term.

Or, choose the indexation option where your payments increase over time, in line with inflation.

You can get an individual or joint policy. Children are automatically covered for the same illnesses, but the maximum payouts are lower.

If you make a successful claim, how you spend it is up to you.

It could cover essential costs like treatment, adapting your home or paying your mortgage and bills.

What about the conditions?

There are two lists of specified illnesses covered by each insurer.

One list includes conditions that entitle you to a full payout, and the other list only covers you for a partial payout.

This is worked out based on the severity of the condition or disability.

A partial payout is typically half of your cover amount but may be capped lower than this, depending on the insurer and policy.

Each condition has a detailed medical definition, usually with terms attached. Claims are only successful if the condition meets the definition fully.

In addition, whoever the claim is for, e.g. you or your child, must survive for a minimum period following the diagnosis, usually 14 days.

What conditions are covered?

Some of the conditions you can get full or partial cover for are shown below.

Full payment conditions Partial payment conditions
Strokes Crohn’s disease
Heart attacks Coronary Artery Angioplasty
Some advanced cancers Less advanced cancers
Dementia Significant visual impairment
Kidney failure Single lobectomy
Parkinson’s disease Permanent pacemaker insertion
Multiple Sclerosis Pituitary tumour
Loss of limb Surgical removal of one eye

Compare the definitions each insurer uses before signing up. Look for differences in the severity needed as well as the conditions themselves.

Are pre-existing conditions covered?

If you’ve got a pre-existing condition, you can’t usually get serious illness cover.

You may get cover for one type of condition that’s different from yours, for example, cancers.

Types of serious illness cover

  1. Standalone serious illness cover
  2. Accelerated serious illness cover with life insurance
  3. Additional serious illness cover with life insurance

1. Standalone cover

A standalone policy is just that. It’s separate from any other life policy you may have and can pay out the cover amount in a successful full payment condition claim.

2. Accelerated cover with life insurance

Accelerated cover combines life insurance with serious illness protection.

You must choose a life cover amount, e.g. €100,000, and a serious illness cover amount, e.g. €50,000.

If you claim on your serious illness cover and are paid €50,000, your life insurance will reduce by that amount, leaving you with €50,000 cover.

Your monthly premium will reduce now there’s less cover and continue until the term ends, or your death, if sooner.

3. Additional cover with life insurance

Additional serious illness cover again requires you to have an amount of life cover, e.g. €100,000 and an amount of critical illness benefit, e.g. €50,000. This time, they’re independent of each other.

For example, if you make a full payment claim on a critical illness, you’ll get a €50,000 lump sum, while your life cover continues at €100,000 for the remaining term.

info icon With an additional or accelerated policy, your serious illness benefit may be capped at 100% of your life cover amount.

How much does cover cost?

There are many things you can’t change that will affect the cost, and some you can. Here are some pointers to help.

How much cover do you need?

This is tricky to answer and depends on what other financial support you have in place if you suddenly couldn’t work for a long time.

Firstly, it’s worth checking your existing policies and what cover they provide e.g. life insurance, mortgage protection insurance, income protection and health insurance, to see if you actually need critical illness cover.

info icon Don’t forget to check for cover provided by your employer too.

Next, think about the amount you’d need to pay your mortgage, bills and day to day living costs for at least a year. Use that amount as a starting point to compare quotes and tweak as required.

Is it worth it?

It’s a bit of a lottery when it comes to planning for the unknown. Plus, the definitions of specified illnesses are getting more and more specific which can make claiming difficult.

So, it’s vital to look carefully at the small print for each insurer and:

You should weigh up other types of insurance that could also protect you e.g. income protection if you’re working.

Income protection has fewer terms attached making it easier to claim but doesn’t offer a lump sum payment.

Serious illness cover FAQs

What age are my children covered up to?

Cover can start from birth and go up to 25 if they’re still in education.

However, the terms around this vary depending on the insurer, so always check.

What is the indexation option?

Instead of paying guaranteed premiums for the whole of the term, with indexation, your payments increase year on year to keep up with inflation.

For example, you might pay an extra 4% which could get you 3% additional cover.

What is the conversion option?

This is where you can make changes to your policy or term whenever you like, without having to answer any additional health questions.

What's the difference between joint and dual policies?

Both joint and dual policies are for two people but they work very differently.

With a joint policy, there’s usually one only payout e.g. for a serious illness or life cover and then the policy ends.

With a dual policy, both people on the policy can make a claim. So, one person may receive a lump sum for a serious illness but the other person can continue to be covered for the full amount until the term ends.