Is an income protection policy more useful than a "critical illness" add on to a life assurance policy?

28 June 2023

Question by Ed

Is an income protection policy more useful than a "critical illness" add-on to a life assurance policy and if so is there a recommended deferment period for when the payout should commence?


Answered by Nicola Crosbie

I feel both types of protection have their place and it’s important to consider your individual circumstances.

Critical or Serious Illness is designed to pay you a lump sum if you are diagnosed with a more serious illness. It is generally, but not exclusively, helpful in paying off debts or providing a lump sum to survive until recovered from the critical illness or to cover medical costs.

Income Protection seeks to replace any lost income if your off sick through illness or disability.

Firstly, you should consider are you paid sick leave when your off work by your employer? Do you have any existing cover in place? Can your family help? Its important to confirm any benefits or arrangements you could utilise in first instance. Then consider your budget. Income protection can pay for a limited period or right up until your chosen retirement age. When considering deferment periods, again look at your savings pots and what, if anything is put by for emergencies. How long can you sustain your outgoings if you had no income coming in? The longer deferment period you factor in, the more cost effective it can be.

Both types of cover can work side by side if the budget entails. I would recommend speaking to an experienced protection adviser to determine your needs and understand the best options for your budget. Protecting against risk is so important and we often forget to insure ourselves, which is often the best investment we can make.

Answered by

Nicola Crosbie

Chartered Financial Planner

With 20 years’ experience behind her, Nicola takes a coaching approach to financial advice, helping even the most nervous investors to take control of their financial situation by empowering them to make more confident, positive decisions for the future. Based in Lochwinnoch, Scotland where she is the Director of Moran Wealth Management Ltd, thanks to secure remote-working practices Nicola supports clients all over the UK.