Serious illness insurance

Understanding serious illness insurance

Serious illness insurance pays a tax‑free lump sum if you are diagnosed with a specific illness listed in your policy. It is sometimes called ‘critical illness cover’ and is often sold as an extra benefit on a term life insurance, whole of life insurance or mortgage protection policy. It can also be bought as a standalone policy.

This page explains what illnesses are typically covered, what exclusions apply, how benefits work and what to check before choosing a policy, including definitions, severity rules and waiting periods. It also outlines who may need this cover, how much it costs and how to make a claim.

 What does a typical serious illness policy cover?

• Serious illness insurance does not replace your income if you are out of work due to long-term illness.
• It pays a once-off lump sum, not ongoing income.
• Only illnesses listed in your policy are covered. Many common illnesses may not be included.
• Not all policies cover the same illnesses or common conditions such as angina, back injury or treatable cancers.

You should check with your insurer or broker for details of the illnesses covered before you take out a policy.

What are typical illnesses covered?

• Stroke
• Heart attack
• Some types of cancer
• Coronary artery disease
• Multiple sclerosis
• Kidney failure
• Motor neurone disease
• Blindness
• Major organ transplantation (including being on a waiting list)
• Benign brain tumour
• Severe burns

Some illnesses may have extra criteria, such as permanent damage or a particular level of severity. Always check your policy document for details.

What exclusions and restrictions apply?

The Central Bank’s Consumer Protection Code requires insurers to explain restrictions, conditions and exclusions that apply to the policy, before any forms are completed. As well as general exclusions, there may be specific exclusions based on your medical history, job or lifestyle.

Policies may include cover for permanent total disability, limited cover for your children and waiting list benefit. If you have a pre-existing medical condition, you may find it difficult to get cover for that illness. 

Permanent total disability (PTD)

• Any-occupation PTD: Claim only if you cannot work at any job and are permanently unable to do normal daily activities, such as walking, lifting, bending, writing or speaking. The risk of this happening to you is quite low, so any-occupation PTD is often included in the standard illness list.
• Own-occupation PTD: Claim if you cannot do your current job. You may not be able to get this extra cover if your job carries a higher risk of disability, for example, if you are a sports professional.

Do you need serious illness cover?

You may want serious illness insurance if you:

• Have no other cover for ill health
• Are not in paid employment and cannot buy income protection insurance
• Have a mortgage, personal loans or other debts that you would still have to pay if you became seriously ill and possibly unable to earn an income
• Have dependants who rely on your income or unpaid work, such as work you do in the home or in a family business

When can you claim the benefit?

You can claim only if:

• The illness is covered by your policy at the time of your claim
• A medical diagnosis matches the definition in your policy terms
• You survive for a period after diagnosis, usually seven or 14 days, depending on the policy

When are you not covered?

You are usually not covered if:

• The illness is caused by drug or alcohol abuse, self-inflicted injury or failure to follow medical advice
• The illness existed before you applied and you did not disclose it
• The illness resulted from dangerous or criminal activities
• You live outside the policy’s territorial limits for a certain period

How do you buy serious illness insurance?

You can buy serious illness insurance directly from an insurance company or through a broker. To apply, you must fill in a detailed proposal form. Some insurers offer extra benefits, usually at a higher cost:

• Personal accident benefit is a weekly payment for a limited period if you cannot work due to accident.
• Hospital cash is a daily payment you receive if you have to stay in hospital for a certain period due to illness or accident. It’s paid for each day you spend in hospital, but usually only after a minimum ‘waiting period’ – for example, you might need to be in hospital for five days before the payments start. 
• A conversion option lets you convert your cover into a new policy when older, even if in bad health.
• Indexation or inflation protection increases cover each year to allow for inflation.

What is waiting list and overseas surgery benefit?

If you are placed on a waiting list for certain major surgeries in Ireland, or if you need major surgery outside Ireland, your insurer may release part of your serious illness benefit early. This is an advance on your lump sum payment, not a separate reimbursement of medical costs. The amount and conditions vary by policy, and it’s designed to help cover expenses while you wait or travel for surgery.

How much does serious illness insurance cost?

Costs depend on:

• Amount of cover
• Who is covered (single or joint cover)
• Term of the policy (usually ends at age 60 or 65)
• Age – as you get older, serious illness cover is likely to cost more. There could be more exclusions, especially if your health or job has changed. Don’t cancel an existing policy to take out a new one unless you have a good reason
• Health
• Family medical history
• Lifestyle choices (e.g. smoking, drinking)

The insurer must ask all relevant questions in plain language during the application process. You must answer fully and honestly. If you don’t, your policy may not be valid, and you may not be able to claim.

Should you buy serious illness cover as an add-on to your mortgage protection policy?

Serious illness cover is often included as an extra benefit on a life insurance or mortgage protection policy. Adding serious illness cover increases the cost, depending on whether the cover is:

• Accelerated: Pays out if you are diagnosed with a listed illness or die within the term. The policy will not pay out twice unless you only receive part of the benefit for a diagnosis. On a joint accelerated policy, if the insurer pays out on one of the insured due to illness, the policy is then cancelled for both. Check the joint accelerated policies for details. 
• Additional (separate) cover: Life insurance and serious illness cover are separate. Also called double cover or stand-alone cover.

Can the monthly cost increase?

• Stand-alone serious illness cover for a fixed term or as part of a fixed term life insurance or mortgage protection insurance policy has a fixed premium.
• Index-linked policies increase premiums annually for inflation.
• Serious illness cover as part of a whole of life policy may have premiums that increase over time.

Is serious illness insurance the best option for you?

Income protection insurance, though more expensive, covers a wider range of illnesses and pays regular benefits until you return to work or retire. If unsure, consider getting financial advice.

How do you make a serious illness cover claim?

Steps to follow:

1. Check your policy. Confirm the illness and severity of the illness is covered.
2. Complete a claims form. Fill out all details accurately and submit medical evidence if required.
3. Get your paperwork in order. Provide original documents (policy, birth certificate, etc.). If you cannot provide originals, contact your insurer or broker for alternatives