Critical illness cover is not the same thing as life insurance. Critical illness cover will pay out a lump sum if you are diagnosed with a certain illness that is named in the policy. Life insurance pays out if you die during the term of the policy.
The policy pays out a tax-free lump sum if you are diagnosed with one of a list of serious conditions within the policy term.
For example, if you take out a 25-year policy with a sum insured of £100,000 and suffer a stroke at any point during that period, you would be able to claim the £100,000.
You can spend the money how you wish, so you could use it to clear any debts, pay for medical bills or to adapt your home to your particular needs. In other words, it can offer a financial lifeline in a time of crisis.
You could also invest some or all of the lump sum to generate an income for your family to live on.
Many insurers also offer children’s critical illness cover at no extra charge, though the pay-out is usually limited to between £10,000 and £25,000.