Income Protection v Critical Illness Protection – What’s the Difference?

Income Protection v Critical Illness Protection – What’s the Difference?


An estimated 35.2 million working days were lost in 2022–2023 as a result of non-fatal workplace injuries and illnesses related to the job. Of these, 3.7 million days were missed because of non-fatal occupational injuries, and 31.5 million days were missed because of illness connected to work. *

Managing insurance can be difficult at times, particularly if you want to protect your funds from unforeseen medical expenses. Income Protection Insurance and Critical Illness Cover are two essential insurance policies that offer financial stability in such situations. Here, we will be explaining how they work, what they offer, and how they can form a crucial part of your financial strategy.


What is Income Protection?

If an illness or accident prevents you from working, Income Protection Insurance can make sure you have a steady monthly income. Depending on the sort of insurance you choose, it might assist you in covering living expenses such as rent or mortgage payments, necessary bills, and other living expenses until you're able to resume employment.

Before policies pay out, there's usually a waiting period that starts the moment you can't work. To determine the right waiting period, it's a good idea to find out what your employer would pay you as well as any potential state benefits. Depending on your age, health, and the amount of money you want to safeguard, different premiums will apply.

Read more about Income Protection here.


What is Critical Illness Cover? 

When certain life-threatening or crippling (but not fatal) diseases are diagnosed, such as heart attack, stroke, cancer, and major organ transplants, Critical Illness Insurance pays out a lump payment. Both this list and the exclusions for filing a claim will differ based on the insurance. Although it can be purchased separately, Critical Illness Insurance is frequently offered as an optional extra to life insurance policies. The money from policies typically only pays out once, so they don't replace your normal income. However, you can spend the money for anything you choose, like your mortgage or medical expenses.

A lot of people purchase Critical Illness Insurance when they become parents or take on a significant obligation, such as a mortgage. But since most of us would prefer to have our financial obligations reduced in the event of a major sickness or complete and permanent disability, the coverage is always important for most of us.

If you currently have Critical Illness Insurance, you should give it some serious thought before cancelling and getting a new coverage. For instance, you could not receive all the benefits when you replace the coverage if you've become sick after you first obtained it. This is because to the possibility that the new policy will not cover pre-existing medical issues.

Learn more about Critical Illness cover here.


What are the differences between Income Protection and Critical Illness Cover?

When you have both income protection insurance and critical sickness cover, you can receive financial support in the event of an unanticipated illness or injury, with no restrictions on how the money is legally used. However, the two policies cover completely different scenarios.

If you receive a diagnosis of a specific, potentially fatal condition or need surgery for one, Critical Illness Coverage offers you a lump sum payment. The biggest advantage is that when you need to concentrate on getting better or receiving treatment, it could help to ease your financial concerns. You could feel a great deal of peace of mind knowing that the cash pay-out could be used to cover your mortgage, other debts, medical expenses, or any essential house improvements.

On the other hand, Income Protection fills in the gaps until you return to work by paying a portion of your salary on a regular basis in the event of an illness or injury that prevents you from working.

A more expansive definition of illness and injury is provided by Income Protection out of the two. You might discover that common ailments like a poor back are not covered by critical illness insurance.


What You Should Know About Critical Illness and Income Protection

Before you purchase one or both policies, it's crucial to keep a few key elements in mind while weighing your alternatives for coverage.




Critical Illness Cover

Income Protection

What’s covered?

Only the crucial conditions listed in the policy. Since every policy is unique, check the details to find out if a certain sickness is covered. For you to be eligible for a pay out, some of these conditions might need to be deemed sufficiently serious.

Most conditions, including stress or back issues, that are serious enough to keep you from working. Check the specific terms of your policy.

What’s not covered? 

Typically, alcohol and drug-related illness, pregnancy-related illness, pre-existing medical conditions. Check policy for details.

Typically, alcohol and drug-related illness, pregnancy-related illness, pre-existing medical conditions. Check policy for details.



In conclusion, while both Income Protection and Critical Illness Cover provide financial support during health crises, they do so in different ways and should be selected based on individual needs and risks. A balanced approach, sometimes combining both types of insurance, can offer the most comprehensive protection against the loss of income due to health issues.

At Owl Financial, we can help you secure a bright financial future through tailored protection advice – your individual situation is a matter of great importance to us. Get in touch with us today, we’re here to help.


Approved by Openwork Limited on 22/02/24