When you start thinking about protecting your future, it quickly becomes clear that life insurance is just one option on the table. Critical illness cover and income protection also play a role, but deciding which of these to include can feel overwhelming.
While these policies may sound similar, each one protects you in a very different way. Together, they form a strong safety net for both you and your family. In this blog, we’ll break down what each policy does, the pros and cons, and why combining them can give you the most complete protection.
The real question many people wrestle with is whether to take just life insurance, or to combine it with critical illness cover and income protection for a more complete safety net.
What does each policy do?
Life insurance
Life insurance pays a lump sum if you die during the policy term. This money can help your family pay the mortgage, household bills, childcare, or any other essential expenses. It ensures your loved ones have the money they need during a difficult time.
Critical illness cover
Critical illness cover pays out a tax-free lump sum if you are diagnosed with a serious condition such as cancer, heart attack, or stroke. This money can help you pay for treatment, pay towards your mortgage, or adapt your lifestyle if you cannot work during recovery.
Income protection
Income protection provides a regular monthly income if you cannot work due to illness or injury. Unlike critical illness cover, which pays out one lump sum, income protection can continue to pay you until you return to work or reach retirement age, depending on the policy.
Whole of life
Whole of life insurance is a type of a policy that covers you for your entire lifetime*. As long as you continue paying the premiums, the policy will pay out a tax-free, lump sum whenever you die, whether that is in 10 years or 50 years. Many people use this as a way to pay off the inheritance tax on their assets.
Pros and cons of each policy
Life insurance
- Pros: Protects your family financially, can be used to pay off debts like a mortgage.
- Cons: Only pays out on death, not while you are alive.
Critical illness cover
- Pros: Provides a lump sum to support you through serious illness, helps with big costs like mortgage payments and the bills.
- Cons: Only pays out if you are diagnosed with one of the listed conditions, not for every illness or injury.
Income protection
- Pros: Offers ongoing financial support, can replace up to 60% of your income, covers a wide range of conditions and injuries.
- Cons: Monthly cost can be higher than life insurance.
Whole of Life
- Pros: Guaranteed payout ensures.
- Cons: Premiums are more expensive than standard life insurance due to the payout being guaranteed.
Why combining together make sense
On their own, each policy leaves a gap:
- Life insurance looks after your family if you die, but not if you survive a serious illness.
- Critical illness cover gives you a lump sum, but once paid, the policy usually ends.
- Income protection pays monthly but does not provide the same large lump sum that critical illness cover does.
When combined, they provide a complete safety net:
- Your family is financially secure if you die.
- You have a lump sum if you face a serious illness.
- You have a regular income if you are unable to work long term.
This mix covers both you and your loved ones, no matter what life throws your way.
Final thoughts
So, should you get life insurance, critical illness cover and income protection? If you want complete financial protection we would recommend life insurance with either critical illness or income protection.
Together, these policies make sure you and your family can cope with death, serious illness, or loss of income.
As a life insurance broker, IGotCover can help you find the right balance to fit your needs and budget. Speak to us today and let’s build a tailored protection plan that keeps your future secure.
*Suicide is not covered in the first 12 months.
