What is the Difference between Life Insurance and Critical Illness Cover?

, by Matt Stevens

Life can be unpredictable, with events such as illnesses, unexpected job loss and debt repayments to name a few. Insurance can help you through tough times and help you get back on your feet.

Life Insurance and Critical Illness Cover are both types of insurance which protect you and your dependents against issues with your health. They can both help to pay your mortgage in the event you are unable to work. However, they are not the same.

Life Insurance

Life Insurance pays out a lump sum to your beneficiaries in the event of your death, if it occurs during the duration of the policy.

This can be subject to a few terms regarding the circumstance of your death. For example, insurance providers will probably not pay out in the event you die due to direct involvement in criminal activity, or if you die in a foreign country not covered by your policy.

To find out more about Life Insurance visit our guide here.

Critical Illness Cover

Critical Illness Cover also pays out a lump sum, but to you instead of your beneficiaries in the event of a diagnosis of a critical condition from a specified list. Typically the policy ends upon a payout.

This type of insurance covers specific illnesses such as cancer, strokes, heart attacks etc. Some policies may also cover severe injuries such as third degree burns or loss of limbs.

To find out more about Critical Illness Cover, visit our guide here.


  • Both types of insurance pay out a tax free lump sum. The amount you are paid is tax free as it is not considered income.
  • Applications and premiums for both depend on the health of the policy holder at the time of starting the policy.
  • The funds from both have no spending restrictions, although it is advised that you use it to sustain you and/or your dependents alongside paying off debts.


  • They protect you against different events. Life Insurance protects your dependents in the event of your death, while Critical Illness Cover protects you in the event of an illness or accident.
  • Your beneficiaries, or your estate, get paid with life insurance, whereas the policy holder gets paid with Critical Illness Cover
  • Life Insurance allows your dependents to pay for your funeral, pay off existing debts and have assured financial stability. While Critical Illness Cover helps you (the policy holder) through the healing/treatment process. Providing you with funds to pay medical bills, debts and act as your income while you can’t work.

Can I Have Both at the Same Time?

Yes! As these are two different types of insurance and cover different things you are able to have them both at the same time. Some insurance providers will suggest that you take both out at the same time.

These types of insurance serve different purposes and therefore they can be held together.

Which One Should I Get?

While you can have them both at the same time, you may only need to have one.

Life Insurance is more needed if you have dependents, as in the event of your death this insurance will guarantee them financial stability. However, if you don’t have dependents, you may not need Life Insurance at all.

Critical Illness Cover works well for everyone as illnesses and accidents are universal. This insurance pays you (the policy holder) the lump sum, rather than paying beneficiaries. Therefore this type is useful for single people and those with no dependents.

Both of them will help pay off your mortgage. However, Life Insurance will allow your dependents to pay it off, while Critical Illness Cover will help you with your mortgage repayments.

As well as Life Insurance and Critical Illness Cover, The Mortgage Genie can help you find other types of cover which are essential for protecting your family and mortgage. Take a look at our mortgage protection insurance, income protection insurance, and home insurance to find out more.

Here at The Mortgage Genie we are committed to delivering the best advice and quotes for those looking for mortgages and insurance. Fill out our no-hassle form today to get personalised advice on Life and Critical Illness Insurance.

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Company Information

The Mortgage Genie Limited is Registered in England and Wales with Company Number 9803176. The Mortgage Genie Limited is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority. Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority. The guidance contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.


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