Income protection vs critical illness cover: Which one’s the right choice for you?

We protect our homes, cars, and holidays, but very few of us protect the thing that pays for all of it — our income. If you became unwell or had an accident that stopped you from working, could you still cover your expenses?

Allow us to introduce income protection and critical illness cover. They both offer support when your health gets in the way of your income, but they work in different ways. Here’s how to tell them apart.

What income protection really means

The point of income protection insurance is to help when you can’t work for a period of time.

It provides a monthly payout, usually covering about half to two-thirds of your normal earnings. This money helps you cover everyday costs like your mortgage, rent, and household bills during your recovery.

After a short waiting period, known as the deferred period, the payments start and continue until you’re back at work or the policy runs its course.

You don’t need a life-threatening illness to claim — stress, exhaustion, or recovery from injury all count if they keep you from working.

Income protection can be a smart choice if:

• You’re self-employed or have limited sick pay.
• Your income supports your household.
• You want peace of mind that your bills will still be paid.

It’s one of the most practical ways to protect yourself financially.

What critical illness cover does

Critical illness cover is a bit different. Instead of regular monthly payments, it gives you a one-off lump sum if you’re diagnosed with a serious medical condition listed in your policy — things like cancer, a heart attack, or a stroke.

It doesn’t depend on whether you can work; it’s based purely on diagnosis.

The money is yours to use however you want — to clear your mortgage, pay for treatment, take time off to recover, or even make changes at home. Once the payout is made, the policy ends.

It’s a type of personal insurance that can bring real peace of mind, especially if you’ve got a family, debts, or a home you want to protect.

Difference between income protection and critical illness cover

Both give you financial help if your health takes a hit — but they do it in very different ways.

So, income protection keeps your household running if you can’t earn.
Critical illness cover helps you deal with the financial shock of a serious illness.

You might find one suits you better than the other — or you might decide to have both for complete peace of mind.

Which one is right for you?

It helps to look at what worries you most.

If the thought of losing your income makes you anxious, income protection is likely the better choice. It replaces part of your salary if you can’t work, so you can keep up with your usual expenses and take the time you need to recover.

If you’re more concerned about a major illness and the big financial hit it might bring, critical illness cover might be what you need. It gives you a lump sum to help pay for medical care, pay off loans, or simply give yourself space to focus on getting well.

Many people actually take both. The lump sum from critical illness cover handles the big expenses, while income protection helps with your regular monthly costs. Together, they can give you complete financial security.

Do you need both?

You don’t have to, but having both can make a lot of sense — especially if you have a mortgage, children, or someone who depends on your income.

Imagine this: you’re diagnosed with cancer and need several months off work. Your critical illness cover could give you a lump sum to pay off your mortgage or fund your treatment. At the same time, your income protection insurance would keep money coming in for your daily living expenses.

One helps with the big, immediate costs. The other helps you get through the recovery period.

It’s about creating a safety net that fits your life — not just one situation.

How to decide what you need

Before you choose, take a moment to think about your financial situation:

• Could you cover your bills for six months without your salary?

If not, income protection should be high on your list.

• Do you have savings or investments to fall back on?

If they wouldn’t last long, insurance can help bridge the gap.

• What sick pay do you get from work?

Some employers offer full pay for months; others only provide statutory sick pay.

• Do you have dependents or a mortgage?

If so, critical illness cover could take a lot of pressure off your family if you became seriously ill.

There’s no one “right” answer — it depends entirely on your personal circumstances and what matters most to you.

Why should you speak with a financial advisor?

Insurance can be confusing — there are so many types of cover, and the small print can make all the difference. Prices also vary more than people realise. That’s why it’s worth having someone on your side who knows the market inside out.

At Fairview Financial Management, we offer independent insurance advice across the UK. We’ll get to know your income, family situation, and long-term goals, then help you find protection that actually fits your life — not just what’s cheapest on paper.

Final thoughts

When it comes to income protection vs critical illness cover, there’s no single right answer. They’re designed for different purposes, and which one you choose depends on what kind of safety net you want.

If you’d struggle to manage your day-to-day costs without your income, income protection could be the priority. If you’d rather have a lump sum to pay off big debts or make major life changes after a diagnosis, critical illness cover might suit you better.

If you’re unsure what would work best for you, our team at Fairview can help. We’ll talk through your situation, explain the options in plain language, and find the cover that gives you and your family real protection — not just a policy in a drawer.