Income Protection vs. Critical Illness Cover: What’s Right for You?

July 13, 2024

When it comes to protecting your finances against illness or injury, many people instinctively look to Critical Illness Cover (CIC). It’s a well-known option — a lump sum payout if you’re diagnosed with a serious condition like cancer, heart attack, or stroke.

But while CIC can be valuable in certain scenarios, it’s not always the most practical or comprehensive solution. That’s why more people are turning to Income Protection as their first line of defence.

Here’s why — and when both might be worth considering.

What Is Income Protection?

Income Protection is designed to replace your income if you’re unable to work due to illness or injury. It pays a monthly benefit until you recover, retire, or reach the end of your policy term — whichever comes first.

In a nutshell:

Replaces lost income if you can’t work
Covers most medical reasons for absence — physical or mental
Offers ongoing support, not just a one-off payment

What Is Critical Illness Cover?

Critical Illness Cover pays a one-off lump sum if you’re diagnosed with a specific condition listed in your policy — typically serious illnesses like cancer, heart attack, or stroke.

It’s often used to help with:

Paying off a mortgage
Funding private treatment
Making home adaptations
Covering immediate financial shocks

But it’s important to understand that not all diagnoses qualify — and that’s where many people are caught off guard.

The “Severity” Factor in CIC

CIC only pays out if your diagnosis meets the insurer’s defined severity criteria. That means:

A heart attack must meet a specific level of heart muscle damage
Some early-stage cancers or mild strokes may not qualify
Conditions not listed in the policy won’t be covered at all

This doesn’t make CIC a bad product — but it does mean it’s not guaranteed to pay out, even if you’re seriously unwell.

Key Differences at a Glance

Feature	Income Protection	Critical Illness Cover
Type of payout	Monthly income	One-off lump sum
Claim trigger	Unable to work due to illness/injury	Diagnosis of a listed condition (meeting severity criteria)
How long it pays	Until recovery or end of policy term	One-time payment
Coverage breadth	Broad — most medical reasons for absence	Narrow — only specific, severe conditions

Why Many Clients Prioritise Income Protection

It’s More Practical for Everyday Life
The biggest financial risk isn’t always a life-changing diagnosis — it’s the inability to work. Whether it’s stress, back pain, or post-surgery recovery, Income Protection helps keep your bills paid.
It Covers More Situations
CIC is limited to named conditions. Income Protection covers almost any illness or injury that stops you working — including mental health, musculoskeletal issues, and chronic fatigue.
It Offers Ongoing Support
Life doesn’t stop after a diagnosis. Income Protection gives you monthly income for as long as you need it — not just a lump sum that may run out.
It Brings Real Peace of Mind
Knowing your income is protected means you can focus on getting better, not worrying about your finances.

When Might CIC Still Be Worth Considering?

While Income Protection is often the priority, Critical Illness Cover can still play a valuable role — especially when used alongside it.

CIC may be suitable if:

You want to clear a mortgage or debt in the event of a major illness
You’re concerned about the cost of private treatment or home adaptations
You’re looking for a lump sum to support your family during a crisis

For some, a combination of both policies offers the most comprehensive protection.

Final Thoughts

Your income is your most valuable financial asset — it pays for everything else. That’s why protecting it with Income Protection is often the smartest first step.

But every situation is different. If you’d like to explore which type of cover (or combination) suits your needs best, we’re here to help — no jargon, no pressure, just clear, honest advice.