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Average cost of life and critical illness cover

If you’ve ever thought about or applying for life insurance in the past then you might have heard about life and critical illness cover. Traditionally life and critical illness cover go hand in hand and is usually set up as one policy that covers for death and serious illness combined.

Life and critical illness cover can be an affordable way to protect you and your family against loss of income in your household. We never know what’s around the corner so it’s important to consider ways to protect your family against potential financial loss.

Death and serious illness of a major breadwinner in the household can have a significant impact on your ability to meet your financial commitments. In this section we’ll look at how life and critical illness cover works and ways to compare to get the best cover for the cheapest prices.

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60-Second Summary – Average cost of life and critical illness cover

In this guide, we’ll look at all of the most frequently asked questions and explain how the average cost of life and critical illness cover works. Life and critical illness cover are two policies that are combined to help protect you and your loved ones in the event of death or serious illness.

  • Our research has found that the cost of life and critical illness cover (on average) is around £49 per month (for £100,000 of family protection). This is an average cost so you may pay more or less than this based on the policies you choose and your own situation.
  • Many people choose to combine life insurance with critical illness cover, to give themselves and their families a higher level of protection.
  • The average cost of life insurance and critical illness cover is based on your age, smoker status, the type and amount (£s) of cover and how long you want to be covered for (policy term).
  • Your general health and lifestyle and your occupation can also impact how much you will pay for your cover. If you have pre-existing medical conditions or a high risk job role, it can be helpful to speak to a life and critical illness cover expert for advice and support.

Life and critical illness cover is essentially two policies combined as one to protect against death and a list of serious or critical illnesses. The life insurance element is fairly straightforward as it simply protects your family and pays out a lump sum in the event of death.

The only potential exclusion with life insurance it’s most commonly death caused by suicide in the first 12 months. Most people don’t think that suicide would be covered on life insurance but in reality it is.

Critical illness cover can be slightly more complicated as it does vary significantly from one insurer to another. Fundamentally, the primary critical illnesses which includes cancer, heart attack, stroke, and MS are covered by almost all critical illness cover policies. There are 7 core conditions which are by far the most common critical illness claims and would generally be covered under most policies.

Some critical elements cover policies might exclude certain pre-existing medical conditions so it’s worth checking any policy documents carefully.

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Based on our extensive market research, we found that the average cost of life of critical illness cover is approximately £49 per month for £100,000 level term (family protection).

The cost of life and critical illness cover is based on the same key elements as all other standard types of personal protection insurance policies which are based on risk of claim and also the amount of cover you want.

The key factors for your life and critical illness cover premiums are:

1) Age

All of these policies are costed based on risk and premiums will always be lower for younger people.

It’s generally advisable to take out cover as young as possible for a longer period.

2) Amount of cover (£s)

You can set the amount of cover to suit your budget as well as your needs and even more so with the critical illness cover element.

You might consider taking out a larger amount of life insurance and a smaller amount of critical illness cover purely because of what they do.

3) Term of policy (years)

If you require cover for a longer period then it is likely that your premiums will increase by a certain percentage as you increase the term.

This is purely because the cover will last up to later in life when the health risks might be higher.

4) Smoker status

It is a well-known fact that smoking causes certain health risks such as an increased risk of lung cancer.

A smoker can pay as much as double of what a non-smoker might pay for life and critical illness cover.

5) Health and medical history

If you have a pre-existing medical condition such as diabetes, asthma, epilepsy or MS then this can cause higher premiums for life and critical illness cover.

Certain pre-existing medical conditions also might mean that you cannot have critical illness cover at all (you should check with a pre-existing conditions specialist).

6) Occupation

Some jobs in certain industries and high risk sectors might have an impact on the cost of your life and critical illness cover.

For example, working at heights, offshore workers, emergency services, pilots and couriers.

How much does life and critical illness cover cost?

Below is a table showing several examples of the costs of life and critical illness cover for people in the UK based on their age. These examples are taken from a list of the top life insurance providers and can change depending on your circumstances.

Age£100,000 Life and Critical Illness Cover (non-smoker) over 25 years£100,000 Life and Critical Illness Cover (smoker) over 25 years
20£13.31£17.82
25£16.63£23.24
30£22.96£34.26
35£31.96£52.17
40£49.89£85.58
45£73.71£128.54
50£124.52£207.55

How does life and critical illness cover work?

The key things to remember with life and critical illness cover is that you one have one policy covering both death and serious illness. This means that you can only claim once up to the maximum amount of cover depending on which happens first.

Does life and critical illness cover pay out twice?

As we’ve explained above, life and critical illness cover is a combined policy and will payout up to the maximum amount of cover. This can mean that it will pay out twice and the event of claim on a smaller critical illness cover element and an amount of life insurance still remains.

How much life insurance do I need?

Life insurance pays out lump sum on death either to your family or other beneficiaries. This type of cover is designed to pay out to replace lost income over a long period of time and to pay off major debts such as mortgages.

How much critical illness cover do I need?

There is a common rule that suggests you might consider critical illness cover policy for the amount of two years salary. If you were to become seriously ill (e.g. cancer, heart attack, or stroke) then how long you would likely be out of work for.

A lump sum from a critical illness cover policy can relieve any financial stress during a period of serious illness and recovery.

Example of a life and critical illness cover claim:

Life Insurance – £200,000

Critical illness cover – £70,000

If you claim on your critical illness cover policy for £70,000 because of a heart attack, then you would still have £130,000 of life insurance left after the claim. Your premiums would be adjusted and he would simply continue to pay for the remaining cover and not the full amount.

There is also the option to have what is called standalone critical illness cover which is basically as it suggests, critical illness cover without life insurance. Traditionally, this option was more expensive due to tax regulations on the critical illness cover element. These tax rules have since changed and it is becoming more and more common for people to have standalone critical illness cover.

Some people do prefer to have critical illness cover on its own or to have two separate policies for life insurance and then another critical illness cover. If this is affordable to you then it can provide you with an extra element of cover should anything happen to you in the future.

There is no right or wrong answer for which type of cover you should have and how much cover you should have. This is purely down to your own personal preferences and your own attitude towards risk.

Can I have joint life and critical illness cover?

All life insurance and critical illness cover policies can be set up on a single or joint life basis depending on your circumstances. It will always be cheaper to have a joint policy purely because it will only pay out once for one individual covered on the plan.

It is definitely worth checking the cost of two single policies against a joint life policy to see whether premiums are affordable.

You should remember that a joint life policy is effectively half the amount of cover of two single policies. Generally, it works out far more cost effective to have two single life policies rather than a joint policy combined.

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As we’ve mentioned above, smoking and using nicotine products (including vaping and E-cigarettes) can cause significant health risks such as the risks of lung cancer. Every life insurance provider will charge a higher premium for smokers to take account of this extra risk.

This can be especially true for critical illness cover where cancer is one of the main reasons for claiming. Premiums for smokers can be as much as double that of what a non-smoker might pay for the same cover.

You should also remember that joint policies will be based on individual costs so if one person smokes and the other person doesn’t, then you’ll only pay smoker rates for the person that smokes.

What if I give up smoking?

All life insurance providers will ask whether you have smoked or used any nicotine products in the last 12 months. You must have been nicotine free for more than one year to be eligible for non-smoker rates for life and critical illness cover.

If you already have a life insurance policy and have since given up smoking then you should definitely check because you might be able to save a significant amount on your premiums. You should speak to your life insurance provider to see whether they can adjust your premiums based on you now being a non-smoker.

Also, if you’re thinking about giving up smoking this might be an incentive to help reduce the costs of life and critical illness cover.

Life and critical illness cover can be frustrating for people with pre-existing medical conditions, especially chronic medical conditions like diabetes, multiple sclerosis and HIV. You might find that life insurance is available but critical illness cover isn’t, because of your pre-existing medical condition.

It is always worth speaking to a pre-existing medical condition specialist, especially when looking for critical illness cover with a medical condition or history.

Prices for life and critical illness cover can also vary significantly and so can exclusions for anyone with any form of pre-existing medical condition. This is why it’s important to get good advice and speak to an expert.

Many people will choose to have life insurance and critical illness cover as a combined policy, as it is easier and more simple to manage. You also only have to go through the application once which can mean much less hassle. This is especially true if you have medical conditions, where you may need to provide additional information or a GP report before your application gets approved.

Of course you don’t have to buy a combined policy if you want life insurance and critical illness cover. Here are some of the reasons that people may decide against a combined life insurance and critical illness cover policy:

  • You don’t want both policies – if you only want life insurance OR critical illness cover, it doesn’t make sense to pay out for both.
  • You want to use two different insurers – one insurer might have a brilliant life insurance policy that works well for you, but you like the look of the critical illness cover provided by a different provider. It’s absolutely fine to have insurance policies with two different providers if this is what you would prefer.
  • You want to add critical illness cover later – it’s possible that critical illness cover is something that appeals to you but you don’t have the budget for it yet. You can choose to buy critical illness cover at a later point, either through the same provider or a different one.

When looking for life and critical illness cover premiums might seem expensive which can be reduced by considering several options. Here are some of the main ways to find cheaper life and critical illness cover to protect you and your family.

1) Reduce the amount of critical illness cover

Critical illness cover will always be the more expensive part of the policy because this is the bet that you are far more likely to make a claim on. You could consider reducing the amount of critical illness cover to make premiums more affordable. This option is usually available with most of the top life and critical illness cover providers.

2) Quit smoking

As we’ve explained above, smokers will automatically pay almost double the premiums of a non-smoker. If you intend to give up smoking and can remain nicotine free for over 12 months then your life and critical illness cover premiums will drop significantly.

3) Improve your health and lifestyle

Life and critical elements covered premiums are based on your health and various other lifestyle factors, such as height and weight or pre-existing conditions. You might be able to reduce your premiums overtime by managing your health and any pre-existing medical condition.

4) Compare quotes and shop around

How to compare the average costs of life and critical illness cover

Usually, there are several main options for getting quotes and comparing life and critical illness cover premiums. It is often worth speaking to a broker or a specialist who can compare rates from the top insurance providers to find the cheapest premiums.

It’s important to consider all of your options, especially when considering critical illness cover to get the best quotes.

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Is it worth paying for life insurance?

Yes, if you’ve got children or financial dependents then you should have life insurance to protect them if you die. Martin Lewis and the Financial Conduct Authority recommend that you take out life insurance to protect your family and your home. Generally, life insurance premiums start from as little as £5 per month and will be cheaper for younger adults.

Common myths about life insurance:

  • Life insurance won’t pay out (pays out 98% of claims)
  • People with medical conditions can’t have life insurance
  • Life insurance is expensive
  • Savings can be just as effective as life insurance
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What is the average cost of life insurance per month?

Based on recent research carried out, the average cost of life insurance is approximately £38 per month and the average level of cover is £152,000. Life insurance premiums also vary dramatically from one insurance provider to another and you can reduce your monthly premiums by shopping around.

Fundamentally, life insurance premiums vary depending on your age, health and the amount of cover that you need, starting from as little as £5 per month. You can also get life insurance to protect your family and your home against financial loss if you die.

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What does life insurance cover you for?

Life insurance is a monthly renewable ‘term insurance’ contract that pays out a cash lump sum or regular payments on death to your family or beneficiaries. Policies are most commonly used for family protection or mortgage protection for your loved ones if you die and your household income reduces, plus the additional issues of losing a parent or carer.

Traditional life insurance will not exclude any pre-existing medical conditions and will cover suicide after 12 or 24 months. You can also use life insurance for business protection purposes as well as tax-efficient business life insurance for directors or key people.

What are the disadvantages of life insurance?

The biggest and most common problem that consumers have with life insurance is the cost and the monthly premiums. This is the top reason for policy cancellations and why more people don’t take out life insurance to protect their family.

Another key disadvantage with life insurance is that it holds no investment value, nor can you cash it in. Life insurance works like any other traditional general insurance policy (e.g. car insurance, house insurance, pet insurance etc.), you pay a monthly premium and it will pay out in the event of a claim. Some people decide to use savings instead of taking out life insurance but you need to make sure that you have sufficient savings to cover the costs of death for your family.

Why do I need life insurance?

The fact is that nobody actually ‘needs’ life insurance, but it is strongly recommended that families and couples have cover to protect their loved ones in the event of death. Martin Lewis recommends life insurance and says “this is something that every parent, partner, or person with any other type of dependent needs to consider”.

Life insurance financially protects your loved ones if you die and pays out a cash lump sum to repay your mortgage, pay for school fees, replace lost income, and pay for regular outgoings. Mortgage life insurance is not linked to your mortgage debt so you can use it to pay off some or all of your mortgage.

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