Should I get Critical Illness Insurance instead of Life Insurance?

A Critical Illness policy pays out a tax free lump sum if you are diagnosed with a serious illness or condition that is covered by your policy. The critical illnesses are not necessarily terminal and, indeed, you may survive with a critical illness for many years. (For example, with blindness)

A life insurance policy pays out a tax free lump sum if you die or, with life policies which include Terminal Illness cover, if you are diagnosed with an illness from which you are expected to die within 12 months.

So you can see that these are subtle, but very important, differences between the two types of policy. Critical Illness policies basicaly provide money to help you cope with the financial effects of serious illness (and you should be aware that 1 in 5 men and 1 in 6 women suffer a critical illness before their normal retirement age). Life Insurance, on the other hand, is more concerned with the financial effects of death, or impending death.

For many people the choice is not should I have critical illness cover instead of life insurance, but should I have both!

However,for people who have no dependents, critical illness insurance may be the more important insurance - better to provide for yourself whilst you're living rather after you've gone.