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Critical Illness Cover Decreasing vs Level Term for Families

For UK families planning to protect their children's future education costs, Level Term Critical Illness Cover is superior to Decreasing Term. At WeCovr, our expert advisers help you compare well-known policies to secure a fixed, reliable claim payment that won't diminish over time.

WeCovr Editorial Team · experienced insurance advisers
Last updated May 14, 2026

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Critical Illness Cover Decreasing vs Level Term for Families

TL;DR

For UK families planning to protect their children's future education costs, Level Term Critical Illness Cover is superior to Decreasing Term. At WeCovr, our expert advisers help you compare well-known policies to secure a fixed, reliable claim payment that won't diminish over time.

Key takeaways

  • Level Term Critical Illness Cover provides a fixed claim payment, making it ideal for funding future education costs which tend to increase over time.
  • Decreasing Term cover is designed for repayment mortgages and is unsuitable for education planning as the cover amount reduces annually, risking a shortfall.
  • Inflation is a major risk; consider an 'Index-Linked' policy to help support your cover's value keeps pace with rising education fees.
  • Placing your policy in a Trust is essential to help support a fast claim payment that avoids probate and potential Inheritance Tax.
  • For couples, two single policies often provide better value and more comprehensive protection than one joint-life policy.

As a parent, your child's future is your highest priority. Providing them with the best possible education is often a cornerstone of that ambition, whether it’s funding private school fees or ensuring they can attend university without the burden of significant debt.

But have you considered what would happen to these plans if you were diagnosed with a serious illness?

A critical illness, such as cancer, a heart attack, or a stroke, can have a devastating financial impact. It could force you to stop working, reduce your hours, or require significant funds for private treatment and lifestyle adjustments. Suddenly, the money earmarked for school fees or university savings could be needed just to keep the household running.

This is where Critical Illness Cover (CIC) provides a vital financial safety net. It may pay out a potentially tax-efficient lump sum on the diagnosis of a specified condition, giving your family the financial breathing room to cope and ensuring long-term goals, like your children's education, remain on track.

However, choosing the right type of cover is crucial. The two most common structures are Level Term and Decreasing Term, and selecting the wrong one can mean the difference between complete security and a significant financial shortfall.

Which structure provides the good value to protect your childrens future education

When securing your children's educational future, the structure of your critical illness policy is paramount. The fundamental question is: does the financial liability you are protecting (education costs) reduce over time, or does it stay the same or even increase?

  • Decreasing Term Cover is designed for a debt that reduces over time, like a capital-and-repayment mortgage. The amount of cover falls each year.
  • Level Term Cover is designed for a liability that remains constant. The cover amount is fixed for the entire policy term.

The stark reality is that education costs do not decrease; they increase due to inflation. A university degree that costs £50,000 today could easily cost over £80,000 in 15 years' time.

Therefore, for protecting your children's future education, Level Term Critical Illness Cover usually provides the good value and security. A decreasing policy is fundamentally misaligned with this goal and creates an unacceptable risk that the claim payment will be insufficient when you may need it most. This article will explore why in detail, helping you make an informed choice for your family.

What is Critical Illness Cover? A Foundation for Your Family's Security

Before comparing policy structures, it’s vital to understand the fundamentals of this powerful protection product.

Critical Illness Cover is an insurance policy that may pay out a one-off, potentially tax-efficient lump sum if you are diagnosed with one of a list of pre-defined serious medical conditions during the policy term.

This money is yours to use as you see fit. There are no restrictions. For families, this financial cushion can be used to:

  • Clear or reduce a mortgage
  • Replace lost income during treatment and recovery
  • Pay for private medical treatments or specialist care
  • Adapt your home for new mobility needs
  • And crucially, protect long-term savings goals like school or university fees.

According to the Association of British Insurers (ABI), UK insurers paid out over £1.47 billion in critical illness claims in 2023, with the average claim payment being over £67,000. The most common reasons for a claim remain cancer, heart attack, and stroke.

It's important to distinguish Critical Illness Cover from other protection policies:

Policy TypeWhat It Doesclaim payment Trigger
Critical Illness CoverPays a one-off potentially tax-efficient lump sum.Diagnosis of a specified serious illness.
Life InsurancePays a lump sum or regular income.Your death during the policy term.
Income ProtectionPays a regular, potentially tax-efficient monthly income.Being unable to work due to any illness or injury (after a waiting period).

While all three are cornerstones of a robust financial plan, Critical Illness Cover is uniquely suited to providing the large capital sum needed to secure a specific financial goal like education funding in the face of a life-altering diagnosis.

Understanding Level Term Critical Illness Cover

Level Term cover is the most straightforward and predictable form of protection.

What it is: With a Level Term policy, the amount of cover (the "sum more confident") and your monthly premium remain fixed for the entire duration of the policy.

How it works: If you take out a £150,000 policy over a 20-year term, your family will receive £150,000 if you make a valid claim in year 2, year 10, or year 19. The claim payment amount does not change.

Real-Life Scenario: The Sharma Family's University Fund

  • The Family: Anjali and Ben have two young children, aged 3 and 5. They want to help support there is enough money to cover university tuition and living costs for both children, which they estimate will be around £100,000 in total when the time comes.
  • The Goal: To assurance a £100,000 fund is available if either parent suffers a critical illness before the children finish their education.
  • The Solution: They each take out a £100,000 Level Term Critical Illness policy with a term of 20 years. This can help make it more likely that no matter when a diagnosis occurs, the full £100,000 is paid out, securing the education fund.

Who is Level Term Cover Best Suited For?

  • Families wanting to protect future costs like university fees.
  • Individuals with an interest-only mortgage.
  • Anyone wishing to leave a specific, fixed lump sum for their family to use as they wish.
  • Business owners needing to protect a fixed business loan.

The key benefit is certainty. You know exactly how much will be paid out, allowing for precise financial planning.

Understanding Decreasing Term Critical Illness Cover

Decreasing Term cover operates on a different principle. It is a specialist product designed for a very specific need.

What it is: With a Decreasing Term policy (also known as "mortgage protection"), the sum more confident reduces each year. The rate of decrease is typically calculated to match the outstanding balance of a capital-and-repayment mortgage.

How it works: You might start with £250,000 of cover. After 10 years, the potential claim payment might have fallen to £150,000. By the end of the term, the cover amount is zero. Because the insurer's risk reduces over time, premiums for decreasing cover are generally lower than for level cover.

Real-Life Scenario: A Misapplication for Education

  • The Family: The Clark family have a £300,000 repayment mortgage and a newborn child. They are advised to take out a £300,000 Decreasing Term policy to cover the mortgage. They believe this also "covers" their child's future.
  • The Problem: In 15 years, their child is preparing for university. At this point, their mortgage may have reduced to £100,000, and so has their insurance cover. If one of them is diagnosed with a critical illness, the £100,000 claim payment will clear the remaining mortgage, which is helpful. However, there is nothing left to fund the now-imminent university costs of £70,000+.
  • The Outcome: The family home is secure, but the education dream is in jeopardy. They have confused protecting a decreasing debt with funding a future, increasing cost.

Who is Decreasing Term Cover Best Suited For?

  • Primarily, individuals and families with a capital-and-repayment mortgage.
  • Those on a very tight budget for whom some cover is different from none.

The primary purpose of this cover is to help support your largest debt is cleared. It is not designed for capital creation or funding future liabilities.

The Verdict: Level vs. Decreasing for Education Costs

When you place the two structures side-by-side with the specific goal of funding education, the conclusion is clear and unequivocal.

The fundamental flaw of using Decreasing Term cover for education is that it moves in the opposite direction of your financial need.

Your child's education costs do not shrink over time; they grow. Relying on a decreasing policy creates a dangerous "protection gap" that widens every single year.

Comparison Table: Protecting Education Costs

FeatureLevel Term Critical Illness CoverDecreasing Term Critical Illness Cover
Alignment with GoalExcellent. Provides a fixed lump sum that matches a future capital need.Very Poor. The cover amount reduces just as the need for education funds becomes more immediate.
claim payment PredictabilityHigh. You know exactly how much will be paid out at any point during the term.Low. The claim payment depends entirely on when you claim. A claim in later years yields a much smaller sum.
Impact of InflationThe real-value of a fixed sum will erode over time. This is why Index-Linked cover is the gold standard.The claim payment is eroded by both the policy structure and inflation, a double blow to its value.
Typical CostHigher than decreasing term, reflecting the higher, sustained level of risk for the insurer.Lower, because the insurer's liability reduces every year. This lower cost comes at the price of security.
Peace of MindHigh. You have a subject to terms fund for your children's future, no matter what.Low. Creates uncertainty and the potential for a major financial shortfall.
Best Use CaseFunding education, covering interest-only mortgages, providing a family legacy.Protecting a capital-and-repayment mortgage.

Adviser's Insight: A common mistake we see at WeCovr is clients choosing decreasing cover for all their needs simply because it's cheaper. While it's perfect for a repayment mortgage, using it to protect your family's future aspirations is a false economy. The small monthly saving is not worth the risk of a £50,000+ shortfall in your child's education fund. For this goal, Level Term cover is the only responsible choice.

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Planning for Specific Education Goals: University vs. Private School Fees

The "best" protection strategy can also depend on the nature of the educational cost you are planning for.

1. Funding University Education

  • The Goal: A single, large lump sum required at a future date (e.g., in 18 years) to cover 3-4 years of tuition, accommodation, and living expenses.
  • A suitable option for your circumstances: Level Term Critical Illness Cover.

The strategy is simple:

  1. Estimate the Future Cost: Research current university costs and use an inflation calculator to project the total cost for when your child will attend. For example, if total costs are £60,000 today, in 18 years at 3% inflation, you'll need over £102,000.
  2. Set the Sum more confident: Choose a level sum more confident that matches this future cost.
  3. Set the Term: The policy term should last until your youngest child has completed their university education (e.g., a 22-year term for a newborn).

A Level Term policy provides a straightforward, perfectly matched solution to create this university fund if illness strikes.

2. Funding Private School Fees

  • The Goal: An ongoing, regular expense, often paid termly or annually for a period of 5 to 14 years.
  • Potential Solutions: This is more complex and has two main approaches.

Option A: A Large Level Term CIC Policy You could take out a large Level Term policy. The lump sum claim payment would then need to be invested carefully in a low-risk portfolio to generate an income to pay the annual school fees. This requires a much larger sum more confident and introduces investment risk.

Option B: Family Income Benefit with Critical Illness Cover This is often a more elegant and cost-effective solution.

  • What is Family Income Benefit (FIB)? Instead of a lump sum, FIB may pay out a regular, potentially tax-efficient monthly or annual income for the remainder of the policy term.
  • How it Works for School Fees: You could set up a policy to pay out £15,000 a year. If you were diagnosed with a critical illness 5 years into a 20-year term, the policy would pay your family £15,000 every year for the remaining 15 years, directly covering the fees. This provides a direct income replacement for the specific cost, removing the need to manage a large lump sum.

For ongoing costs like school fees, a specialist product like Family Income Benefit with a critical illness element can be a superior and more tailored solution. An expert adviser can model both options to see which suits your family's needs and budget.

The Hidden Threat: How Inflation Erodes Your Children's Future

We've established that Level Term cover is superior to Decreasing Term. But even a level policy has a vulnerability: inflation. A lump sum of £100,000 is worth a lot less after 20 years of rising prices.

The cost of education, in particular, has historically risen faster than general inflation. This means a policy that seems adequate today could fall short tomorrow.

The Impact of 3% Annual Inflation on a £50,000 Education Fund:

Years from NowRequired Fund
0 (Today)£50,000
5 Years£57,964
10 Years£67,196
15 Years£77,898
20 Years£90,306

As you can see, over a typical childhood, the real cost of your goal can almost double.

The Gold Standard Solution: Index-Linked Cover

one way to combat this is with an Index-Linked or Increasing Cover policy.

  • How it works: With an index-linked policy, both your sum more confident and your monthly premium increase each year. The increase is typically tied to the Retail Prices Index (RPI) or a fixed percentage (e.g., 5%).
  • The Benefit: This can help support the future claim payment from your policy maintains its real-world purchasing power. Your £100,000 of cover grows over time, so if you claim in 15 years, the claim payment might be £150,000 – exactly what's needed to cover the inflated cost of education.

While premiums for index-linked cover increase over time, they start at a similar level to standard policies. It is the most robust way to assurance your children's educational future is fully protected. WeCovr specialists or broker partners typically recommend clients compare quotes for index-linked cover to see the long-term value it provides.

Essential Considerations for Business Owners and the Self-Employed

If you run your own business or are self-employed, robust protection planning isn't just a good idea—it's essential. You don't have the safety net of employer-sponsored sick pay or death-in-service benefits. Your family's financial security, including their education, rests squarely on your ability to earn an income and the health of your business.

A critical illness diagnosis can trigger a double-crisis: a personal health battle and a business survival threat.

For Company Directors

As a director, your health is a primary asset of your company. Your inability to work can directly impact revenue, operations, and staff morale.

  • Executive Income Protection: This is a vital policy paid for by your business. If you're unable to work due to illness or injury, it pays a replacement income to you, but the premiums are treated as an allowable business expense. This is often more tax-efficient than a personal policy.
  • Key Person Insurance: What would happen to your business if you, or another crucial director, were diagnosed with a critical illness? Key Person cover pays a lump sum to the business to cover lost profits, recruit a replacement, or clear business debts. By stabilising the business, it protects your personal income stream, which in turn protects your ability to fund education.
  • Shareholder Protection: If you have co-directors, a critical illness diagnosis can create ownership chaos. A Shareholder Protection agreement, funded by insurance, provides the remaining shareholders with the funds to buy your shares, allowing your family to exit the business with a fair cash value. This lump sum can be instrumental in securing long-term goals like education.

For Freelancers and Sole Traders

You are your business. If you can't work, the income stops immediately.

  • Personal Income Protection: This should be your absolute first priority. It provides a monthly income to cover your bills and living costs if you're too ill to work, taking the pressure off your savings.
  • Critical Illness Cover as a Capital Lifeline: For a freelancer, a CIC claim payment is more than just a personal safety net. It can act as a vital capital injection to:
    • Cover business overheads (software, subscriptions, rent) while you recover.
    • Hire a temporary replacement to service clients.
    • Provide the funds to pivot or wind down the business without financial pressure.
    • Crucially, it decouples your long-term education fund from your immediate business survival needs.

For business owners, personal and business protection are two sides of the same coin. Securing the business is a direct way of securing your family's future.

Advanced Planning: Getting the Details Right

Choosing between Level and Decreasing Term is the first step. To create a truly robust plan, you may need to consider the finer details. These are the areas where regulated guidance adds enormous value.

1. Writing Your Policy in a Trust

This is arguably the most important piece of administrative planning, yet it is often overlooked.

  • What is a Trust? A trust is a simple legal arrangement that separates the ownership of the policy from your estate. You appoint 'trustees' (e.g., your partner, a sibling, or a trusted friend) to manage the policy and its claim payment according to your wishes.
  • Why is it Critical?
    1. Avoids Probate: Without a trust, the policy claim payment becomes part of your legal estate. This means it can be locked in probate for months, or even years, after a claim. With a trust, the trustees can claim the money immediately, making funds available when your family needs them most.
    2. Mitigates Inheritance Tax (IHT): A large CIC claim payment could inadvertently push the value of your estate over the IHT threshold (£325,000 in 2026). By placing the policy in trust, the claim payment is made directly to the beneficiaries and is not considered part of your estate for IHT purposes.
    3. can help support Control: You can specify in the trust document how you want the money to be used, ensuring it is managed responsibly for your children's education.

Most UK insurers provide standard trust forms for free. As part of our service, WeCovr specialists or broker partnersmplete these forms correctly, ensuring their plan works as intended.

2. subject to terms vs. Reviewable Premiums

  • guaranteed premiums: Your premium is fixed for the entire policy term. You know exactly what you may pay from day one to the end. This provides budget certainty and is highly recommended.
  • Reviewable Premiums: These premiums may start cheaper but the insurer has the right to 'review' and increase them every few years, based on their claims experience and medical advances. This can lead to significant, unaffordable price hikes in later years, forcing you to cancel the cover when you may need it most. We usually advise clients to choose guaranteed premiums.

3. Joint Life vs. Two Single Policies

For couples, it can seem logical to buy a 'joint life' policy. However, this is often not the best approach.

  • Joint Life, First Event: This policy covers two people but only may pay out once, on the first person to be diagnosed with a critical illness or pass away. After the claim payment, the policy ends, leaving the surviving partner with no cover.
  • Two Single Policies: This involves each partner taking out their own individual policy. The combined monthly cost is often very similar to a joint policy, but it provides far superior protection. If one partner claims, their policy may pay out, and the other partner's policy remains fully intact. This provides double the potential cover for the family.

A Note on Whole of Life Insurance

You may have heard of "Whole of Life" policies and wonder how they fit in. It's important to understand the distinction between modern and older plans.

In modern UK protection planning, most whole of life policies are pure protection with no cash-in value.

  • They are designed to run for your entire life and assurance a claim payment upon your death, whenever that occurs.
  • If you stop paying the premiums, the cover ends and you get nothing back.
  • These plans are transparent, increasingly affordable, and are primarily used for two specific goals: Inheritance Tax (IHT) planning or to leave a subject to terms legacy. WeCovr focuses on these straightforward, subject to terms protection plans, comparing them across our panel.

It's crucial to distinguish these from older types of policies.

  • Older investment-linked or with-profits whole of life policies worked very differently.
  • Part of your premium funded the life cover, and the rest was invested in a fund.
  • These were designed to build a 'surrender value' over many years. However, they were often complex, expensive, and performance-dependent. Surrendering a policy in the early years often resulted in getting back less than you had paid in.

For the goal of protecting your family during your working years and funding education, a Term Insurance policy (Level Term) is far more suitable and cost-effective than a Whole of Life plan.

How WeCovr Specialists or Broker Partners Help You Build the Right Protection

Navigating the world of critical illness cover can be complex. The definitions, structures, and optional benefits vary significantly between insurers. Making the right choice is vital for your family's financial security.

This is where working with an WeCovr specialist or one of our broker partnerse.

  • panel-based Comparison: We are not tied to any single insurer. We compare policies and prices from across the entire UK market to find the plan that offers the best definitions and value for your specific needs.
  • Expert, Regulated Advice: Our advisers are specialists in protection insurance. We'll help you calculate the right amount of cover, decide on the correct term, and understand the benefits of Level, Increasing, and Family Income Benefit structures.
  • Hassle-Free Process: We handle the application process for you and liaise with the insurers. We are experts in helping clients with complex medical histories or occupations find the cover they need.
  • Trust Planning Included: We provide and help you complete the essential trust forms for free, ensuring your policy claim payment is fast, efficient, and tax-friendly.
  • Ongoing Support: Our commitment doesn't end when the policy starts. As part of our customer care programme, all our clients receive complimentary access to our AI-powered calorie and nutrition tracking app, CalorieHero, to support their long-term health and wellness goals. We are also here to help if you ever need to make a claim.

Our goal is simple: to give you the peace of mind that comes from knowing your family and their future are properly protected.

Frequently Asked Questions (FAQs)

How much critical illness cover do I need for education fees?

To calculate the right amount of cover, you should first estimate the total future cost of the education you want to fund. For university, this includes tuition fees, accommodation, and living costs for the duration of the degree. For private school, calculate the annual fees multiplied by the number of years. Crucially, you should consider whether you may need to then use an inflation calculator (assuming 3-4% annual inflation) to project this cost to the future date when the funds will be needed. An index-linked, level term policy is one way to protect this future amount.

Is critical illness cover claim payment taxable in the UK?

No, the lump sum paid out by a personal critical illness policy is not subject to Income Tax or Capital Gains Tax in the UK. However, if the policy is not written in trust, the claim payment will form part of your legal estate and could be subject to Inheritance Tax (IHT) if your estate's value exceeds the IHT threshold. This is why placing your policy in trust is so important.

What's more important: Critical Illness Cover or Income Protection?

Financial advisers view them as equally important as they protect against different financial outcomes. Income Protection is the foundation, designed to replace your monthly salary and cover day-to-day living costs if any illness or injury stops you from working. Critical Illness Cover provides a lump sum to tackle large capital costs, repay debt, or adapt to a new lifestyle after a specific, serious diagnosis. Ideally, a comprehensive financial plan should include both. If you have to choose, Income Protection is often prioritised as it covers a wider range of scenarios and protects your core ability to pay bills.

Can I get critical illness cover if I have a pre-existing medical condition?

Yes, it is often still possible to get cover. you should consider whether you may need to declare all pre-existing conditions fully and honestly during your application. The insurer will then assess the risk. Depending on the condition, its severity, and how long ago you had it, the insurer may offer cover at standard rates, apply a premium loading (increase the price), or place an exclusion on the policy for that specific condition. In some cases, they may decline cover. Using an expert broker is vital in this situation as we know which insurers are most sympathetic to certain conditions.

Conclusion: Investing in Peace of Mind

Protecting your children’s educational future is one of the most powerful gifts you can give them. While you save and plan for this bright future, it is essential to protect it from the unexpected. A critical illness diagnosis shouldn't have to derail your family's dreams.

When it comes to structuring your cover, the choice is clear. A Decreasing Term policy, while cheaper, is wholly inappropriate for funding an appreciating asset like education. It creates a high-risk strategy where your protection diminishes just as your need grows.

Level Term Critical Illness Cover, ideally index-linked to keep pace with inflation, provides the certainty and security your family deserves. It may help provide that a fixed, reliable sum of money will be there to safeguard your children's education, no matter what life throws your way.

Take the first step towards securing your family's future today. Contact WeCovr for a free, no-obligation quote. Our expert advisers will compare the UK insurer panel to find the right protection for you, at the most competitive price.

Sources

  • Association of British Insurers (ABI)
  • Financial Conduct Authority (FCA)
  • Office for National Statistics (ONS)
  • NHS
  • gov.uk
  • Cancer Research UK
  • British Heart Foundation

Important Information and Risks

No advice: This article is for general information only. It is not financial, legal, insurance, or tax advice, and it is not a personal recommendation. WeCovr does not assess your individual circumstances or recommend a specific product through this article.

Policy exclusions and underwriting: Insurance policies, including life insurance, private medical insurance, critical illness cover, and income protection, are subject to insurer underwriting, eligibility, acceptance criteria, terms, conditions, limits, and exclusions. Pre-existing medical conditions may be excluded, restricted, or accepted on special terms unless an insurer confirms otherwise in writing.

Tax treatment: References to tax treatment, HMRC rules, or business reliefs are based on current UK legislation and guidance, which can change. Tax treatment depends on your personal or business circumstances and may differ from examples in this article.

Before you buy: Always read the Insurance Product Information Document (IPID), policy summary, and full policy terms before buying, renewing, changing, or keeping cover. If you are unsure whether a policy is suitable for you, speak to an insurance adviser.

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Why life insurance and how does it work?

What is Life Insurance?

Life insurance is an insurance policy that can provide financial support for your loved ones when you or your joint policy holder passes away. It can help clear any outstanding debts, such as a mortgage, and cover your family's living and other expenses such costs of education, so your family can continue to pay bills and living expenses. In addition to life insurance, insurance providers offer related products such as income protection and critical illness, which we will touch upon below.

How does it work?

Life insurance pays out if you die. The payout can be in the form of a lump sum payment or can be paid as a replacement for a regular income. It's your decision how much cover you'd like to take based on your financial resources and how much you'd like to leave to your family to help them deal with any outstanding debts and living expenses. Your premium depends on a number of factors, including your occupation, health and other criteria.

The payout amount can change over time or can be fixed. A level term or whole of life policy offers a fixed payout. A decreasing term policy offers a payout that decreases over the term of the cover.

With critical illness policies, a payout is made if you’re diagnosed with a terminal illness with a remaining life expectancy of less than 12 months. While income protection policies ensure you can continue to meet your financial commitments if you are forced to take an extended break from work. If you can’t work because you’ve had an accident, fallen sick, or lost your job through no fault of your own, income protection insurance pays you an agreed portion of your salary each month.

Income protection is particularly helpful for people in dangerous occupations who want to be sure their mortgage will always be covered. Income protection only covers events beyond your control: you’re much less likely to be covered if you’re fired from your job or if you injure yourself deliberately.

Questions to ask yourself regarding life insurance

Just ask yourself:
👉 Who would pay your mortgage or rent if you were to pass away or fall seriously ill?
👉 Who would pay for your family’s food, clothing, study fees or lifestyle?
👉 Who would provide for the costs of your funeral or clear your debts?
👉 Who would pay for your costs if you're unable to work due to serious illness or disability?

Many families don’t realise that life, income protection and critical illness insurance is one of the most effective ways to protect their finances. A great insurance policy can cover costs, protect a family from inheriting debts and even pay off a mortgage.

Many would think that the costs for all the benefits provided by life insurance, income protection insurance or critical illness insurance are too high, but the great news is in the current market policies are actually very inexpensive.

Benefits offered by income protection, life and critical illness insurance

Life insurance, income protection and critical illness insurance are indispensable for every family because a child loses a parent every 22 minutes in the UK, while every single day tragically 60 people suffer major injuries on the UK roads. Some people become unable to work because of sickness or disability.

Life insurance cover pays out a lump sum to your family, loved ones or whomever you choose to get the money. This can be used to secure the financial future of your loved ones meaning they would not have to struggle financially in the event of your death.

If it's a critical illness cover, the payout happens sooner - upon diagnosis of a serious illness, disability or medical condition, easing the financial hardship such an event inevitably brings.

Income protection insurance can be very important for anyone who relies on a pay check to cover their living costs, but it's especially important if you’re self-employed or own a small business, where your employment and income is a bit less stable. It pays a regular income if you can't work because of sickness or disability and continues until you return to paid work or you retire.

In a world where 1 in 4 of us would struggle financially after just four weeks without work, the stark reality hits hard – a mere 7% of UK adults possess the vital shield of income protection. The urgency of safeguarding our financial well-being has never been more palpable.

Let's face it – relying on savings isn't a solution for everyone. Almost 25% of people have no savings at all, and a whopping 50% have £1,000 or less tucked away. Even more concerning, 51% of Brits – that's a huge 27 million people – wouldn't last more than one month living off their savings. That's a 10% increase from 2022.

And don't even think about state benefits being a safety net. The maximum you can expect from statutory sick pay is a mere £109.40 per week for up to 28 weeks. Not exactly a financial lifeline, right?

Now, let's tackle a common objection: "But I have critical illness insurance. I don't need income protection too." Here's the deal – the two policies apply to very different situations. In a nutshell:

  • Critical illness insurance pays a single lump sum if you're diagnosed with or undergo surgery for a specified potentially life-threatening illness. It's great for handling big one-off expenses or debts.
  • Income protection, on the other hand, pays a percentage of your salary as a regular payment if you can't work due to illness or injury. It's the superhero that tackles those relentless monthly bills.

Types of life insurance policies

Common reasons for getting a life insurance policy are to:
✅ Leave behind an amount of money to keep your family comfortable
✅ Protect the family home and pay off the mortgage in full or in part
✅ Pay for funeral costs

Starting from as little as a couple of pounds per week, you can do all that with a Life Policy.

Level Term Life Insurance
One of the simplest forms of life insurance, level term life insurance works by selecting a length of time for which you would want to be covered and then deciding how much you would like your loved ones to receive should the worst happen. Should your life insurance policy pay out to your family, it would be in a lump sum amount that can be used in whatever way the beneficiary may wish.

Decreasing Term Life Insurance
Decreasing term life insurance works in the same way as level term, except the lump sum payment amount upon death decreases with time. The common use for decreasing term life cover is to protect against mortgage repayment as the lump sum decreases along with the principal of the mortgage itself.

Increasing Term Life Insurance
Increasing term life insurance aims to pay out a cash sum growing each year if the worst happens while covered by the policy. With increasing term life cover amount insured increases annually by a fixed amount for the length of the policy. This can protect your policy's value against inflation, which could be advantageous if you’re looking to maintain your loved ones’ living standards, continue paying off your mortgage in line with its repayment schedule and cover your children’s education fees.

Whole of Life Insurance
Whereas term life insurance policies only pay out if you pass away during their term, whole of life insurance pays out to your beneficiaries whenever this should happen. The most common uses for whole life insurance are to cover the costs of a funeral or as a vehicle for your family's inheritance tax planning.

Family Income Benefit
Family income benefit is a somewhat lesser-known product in the family of life insurance products. Paying out a set amount every month of year to your beneficiaries, it is the most cost-effective way of maintaining your family's living standards to an age where you'd expect them to be able to support themselves financially. The most common use would be for a family with children who are not working yet so are unable to take care of themselves financially.

Relevant Life Insurance
Relevant Life Insurance is a tax-efficient policy for a director or single employee. A simple level term life insurance product, it is placed in a specific trust to ensure its tax efficiency. The premiums are tax deductible and any benefit payable should a claim arise is also paid out tax free, which makes it an attractive product for entrepreneurs and their businesses.

Important Fact!

There is no need to wait until the renewal of your current policy.
We can look at a more suitable option mid-term!

Why is it important to get life insurance early?

👉 Many people are very thankful that they had their life, income protection, and critical illness insurance cover in place before running into some serious issues. Critical illness and income protection insurance is as important as life insurance for protecting your family's finances.

👉 We insure our cars, houses, bicycles and even bags! Yet our life and health are the most precious things we have.

Easily one of the most important insurance purchases an individual or family can make in their lifetime, the decision to buy life, income protection, critical illness and private medical health insurance can be made much simpler with the help of experienced advisers. They are the specialists who do the searching and analysis helping people choose between various types of life insurance policies available in the market, including income protection, critical illness and other types of policies most suitable to the client's individual circumstances.

It certainly won't do any harm if you speak with one of our experienced FCA-authorised insurance partner experts who are passionate about advising people on financial matters related to life insurance and are keen to provide you with a free consultation.

You can discuss with them in detail what affordable life, income protection, critical illness or private medical health insurance plan for the necessary peace of mind they would recommend! WeCovr works with some of the best advisers in the market.

By tapping the button below, you can book a free call with them in less than 30 seconds right now:

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Any questions?

Life, income protection, and/or critical illness insurance are safety nets, very important at a difficult time. If anything happened to you before your cover ends, your life or critical illness insurance would pay a lump sum to your family and/or you (if you took a critical illness or income protection cover) to help cover the losses. Being diagnosed with a critical illness can be devastating, and it won't help matters to be also worrying about how you would cope financially. With a life, income protection, or critical illness policy, you can choose how much cover you need, how you want the policy to pay out, and whether you want cover for both you and your partner. Income protection insurance pays you a regular income if you can't work because of sickness or disability and continues until you return to paid work or you retire. Also known as permanent health insurance, it is quite important for anyone who relies on a paycheck to cover their living costs, but it's particularly important if you're self-employed or own a small business, where your income might be a bit less stable.

Life, income protection, and critical illness insurance pay out millions to families every day. Your expert will explain to you that you need to be honest and open when applying for your insurance.

If you're single with no dependants then it may be that you don't need life assurance. However, if you were to become seriously ill and unable to work, you may benefit from a critical illness or income protection policy. They can help you keep up to date with your rent, bills, food, and other expenses.

It's free to use WeCovr to find life, income protection, and critical illness insurance - we never charge you for quotes. Critical illness, income protection, and life insurance is an investment that pays many times over for you and/or your loved ones.

Life, income protection, and critical illness insurance are important financial products that insurance companies take a lot of care and diligence, so speaking to real human beings ensures that they understand your requirements fully so that you can get the right cover.

All of our partners are carefully vetted and authorised by the FCA, which means they are held to the highest standards that the FCA expects from them and treat all customers fairly!

Our insurance partners give us a few pounds when you take out a policy with one of their experts.

The cost of life insurance depends on several factors, including your age, occupation, health status, and the level of coverage you choose. Your life insurance policy is tailored to your needs, and the cost can vary based on the sum assured, policy term, and other factors.

Some life insurance policies offer an option to add critical illness cover as a rider or as a separate policy. This provides a lump sum payment if you are diagnosed with a critical illness covered by your policy, offering financial support during a difficult time.

Yes, life insurance is available to self-employed individuals to provide financial protection for their loved ones in the event of their death. It ensures that your family can maintain their standard of living and cover expenses such as mortgage payments, bills, and education costs.

If you outlive your life insurance policy and it expires without a claim, you will not receive any payout. Term life insurance policies are designed to provide coverage for a specific period, and once that period ends, the policy terminates without any residual value. However, you can typically renew or purchase a new policy if you still need coverage.

Critical illness insurance provides a lump sum payment if you're diagnosed with a serious illness covered by your policy, offering financial support during a difficult time. It can help cover medical expenses, mortgage payments, and other financial obligations while you focus on recovery.

Critical illness insurance covers a range of serious illnesses and medical conditions specified in your policy, such as cancer, heart attack, stroke, and organ failure. The lump sum payment can be used to cover medical treatment, ongoing care, and living expenses during your recovery.

The cost of critical illness insurance varies depending on factors such as your age, health status, lifestyle, and the level of coverage you choose. Our experts can provide personalised quotes to help you find affordable coverage.

Yes, you can have critical illness insurance alongside your health insurance coverage. Critical illness insurance provides additional financial protection specifically for serious illnesses, complementing your health insurance benefits.

Critical illness insurance policies typically have exclusions for pre-existing conditions and certain medical conditions not covered by the policy. It's essential to review the terms and conditions of your policy to understand what is and isn't covered.

Some critical illness insurance policies may provide coverage for recurring illnesses, while others may not. It's crucial to review the policy terms and understand the specific conditions under which you can make additional claims for recurring illnesses. Your insurer can provide more details on their coverage for recurring critical illnesses.

Yes, you can customise your life insurance policy to suit your individual needs and circumstances. Options may include choosing the sum assured, policy term, premium payment frequency, and additional riders for enhanced coverage.

If you miss a premium payment for your life insurance policy, your coverage may lapse, and your policy could be terminated. However, many insurers offer a grace period during which you can make the payment to keep your policy active. It's essential to contact your insurer to discuss your options if you're unable to make a payment.

Yes, you can typically change the beneficiary of your life insurance policy at any time by completing a beneficiary change form provided by your insurer. It's essential to keep your beneficiary designation up to date to ensure that the proceeds are distributed according to your wishes.

Term life insurance provides cover for a fixed period, such as 10, 20 or 30 years, and pays out a lump sum if you die during that time. It’s often chosen to protect a mortgage or to provide financial support while dependants still rely on your income. Whole-of-life insurance is designed to last for the rest of your life and guarantees a payout whenever you die, as long as premiums are maintained. It’s usually more expensive than term insurance and is sometimes used to help with inheritance tax planning or to leave a guaranteed legacy.

Some term life insurance policies offer the option to convert to a whole life insurance policy without the need for a medical exam or new underwriting. This conversion feature allows you to maintain coverage beyond the term of your policy and provides lifelong protection.

Some life insurance policies offer accelerated death benefits or living benefits that allow you to access a portion of the death benefit if you are diagnosed with a terminal illness. This feature provides financial assistance to help cover medical expenses and other costs during your final months.

While having savings can provide a financial cushion during tough times, income protection insurance offers additional security by replacing a portion of your income if you're unable to work due to illness or disability. It ensures that you can maintain your standard of living and cover essential expenses even if your savings are depleted.

Yes, self-employed individuals can claim income protection insurance if they're unable to work due to illness or disability. Income protection provides a regular income stream to replace lost earnings, helping self-employed individuals cover their living expenses and business costs during periods of incapacity.

The waiting period, also known as the elimination period, is the length of time you must wait after becoming unable to work due to illness or disability before you can start receiving benefits from your income protection insurance policy. Waiting periods typically range from 30 to 90 days, but longer waiting periods may result in lower premiums.

Income protection insurance is designed to provide financial support if you're unable to work due to illness or disability, not for redundancy. However, some policies may offer optional redundancy cover or unemployment cover as an additional benefit, providing a lump sum or monthly payments if you're made redundant.

The tax treatment of income protection insurance benefits depends on whether the premiums were paid with pre-tax or after-tax dollars. Benefits from policies funded with after-tax dollars are typically tax-free, while benefits from policies funded with pre-tax dollars may be subject to income tax. It's essential to consult with a tax advisor to understand the tax implications of your income protection insurance benefits.

Income protection insurance provides a regular income stream if you're unable to work due to illness or disability, while critical illness insurance provides a lump sum payment if you're diagnosed with a covered critical illness, such as cancer, heart attack, or stroke. Critical illness insurance offers financial support to cover medical expenses, living costs, or other obligations during your recovery.

Income protection insurance policies typically have a waiting period (also known as an elimination period) during which you do not receive benefits. If you become unable to work before this waiting period ends, you will not receive any income protection benefits until the waiting period has elapsed. It's important to have sufficient savings or other financial resources to cover your expenses during this initial period.

Many income protection insurance policies allow you to increase your coverage amount if your income rises, without the need for additional underwriting or medical examinations. This feature, sometimes called a 'guaranteed insurability option,' ensures that your coverage keeps pace with your increasing income and financial obligations.

The maximum age to purchase critical illness insurance varies depending on the insurer and the specific policy. While some insurers may offer critical illness insurance up to age 70 or beyond, others may have lower age limits. It's essential to check with insurers to determine their age eligibility criteria for purchasing critical illness insurance.

Whether you can get critical illness insurance if you have pre-existing conditions depends on the insurer's underwriting guidelines and the specific medical conditions. Some insurers may offer coverage with exclusions for pre-existing conditions, while others may decline coverage altogether. It's essential to disclose any pre-existing conditions when applying for critical illness insurance and discuss your options with insurers.

While health insurance provides coverage for medical expenses, critical illness insurance offers financial protection for broader expenses associated with a serious illness, such as lost income, household bills, and lifestyle changes. Critical illness insurance complements health insurance by providing additional financial support during a challenging time, ensuring that you can focus on recovery without worrying about financial burdens.

If you don't make a claim on your critical illness insurance during the policy term, you won't receive a benefit payout. However, having critical illness insurance provides peace of mind knowing that you're financially protected if you're diagnosed with a covered critical illness during the policy term. It's a form of financial preparation for unexpected events and offers valuable protection for you and your family.

If you outlive your critical illness insurance policy and don't make a claim for a covered critical illness during the policy term, the coverage will expire, and you won't receive a benefit payout. Critical illness insurance provides financial protection for a specific period, typically until a specified age or policy term, and offers peace of mind knowing that you're prepared for the unexpected.

Yes, many insurers offer optional riders or add-ons that you can add to your critical illness insurance policy for enhanced coverage. Common riders may include waiver of premium, which waives future premium payments if you become disabled, or return of premium, which refunds a portion of your premiums if you don't make a claim during the policy term. It's essential to review available riders with insurers to customise your coverage to meet your specific needs.

To make a claim on your critical illness insurance policy, you'll need to notify your insurer of your diagnosis and submit a claim form along with any required medical documentation, such as medical reports, test results, and physician statements. Once your claim is reviewed and approved by the insurer, you'll receive the lump sum benefit payment, which you can use to cover medical expenses, living costs, or other financial needs during your recovery.

As we age, the likelihood of encountering health complications increases for us all. In the event that you develop a severe medical condition, critical illness protection can assist with the expenses of crucial bills – enabling you to concentrate on recuperation or adjusting to your new health circumstance.

The typical expense of a Critical Illness protection policy will fluctuate based on aspects such as your age and medical background. As per our investigation, you can secure a policy starting from as low as £8 (for a non-smoking 21-year-old individual).

The most prevalent critical illnesses in the UK are cancer, cardiac arrest, and cerebrovascular accident (stroke).

Cancer is one of the primary causes for critical illness insurance claims in the UK. Cancer constitutes over 80% of critical illness cover claims for females and about 45% of critical illness claims for males.

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Who Are WeCovr?

WeCovr is an insurance specialist for people valuing their peace of mind and a great service.

👍 WeCovr will help you get your private medical insurance, life insurance, critical illness insurance and others in no time thanks to our wonderful super-friendly experts ready to assist you every step of the way.

Just a quick and simple form and an easy conversation with one of our experts and your valuable insurance policy is in place for that needed peace of mind!