# Critical illness vs income protection — what's the difference?

> Compare · Last reviewed 26 May 2026

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## Quick answer

Critical illness cover pays a tax-free lump sum if you're diagnosed with one of the specific illnesses listed in the policy. Income protection pays a monthly tax-free income if illness or injury stops you working, until you can work again (or up to a set age).

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Both are forms of protection insurance. They answer different questions: 'what if I get a serious illness and need a lump sum?' versus 'what if I can't work and need an ongoing income?'.

## Critical illness cover vs Income protection

| Criterion | Critical illness cover | Income protection |
| --- | --- | --- |
| Payout type | Lump sum | Monthly income (typically up to 60–70% of salary) |
| Trigger | Diagnosis of a listed condition (e.g. cancer, heart attack, stroke) | Inability to work due to illness or injury, after a deferred period |
| Payout duration | One-off | Until return to work, end of claim limit, or retirement age |
| Deferred period | Usually none | Typically 4–52 weeks; longer deferred period = lower premium |
| Conditions covered | Defined list (varies by insurer; ABI uses standard definitions) | Any illness/injury that meets the policy's incapacity definition |
| Tax on payout | Tax-free (for individuals) | Tax-free (for individuals) |
| Typical use | Clear mortgage or major costs after a serious diagnosis | Replace income for the period you can't work |

## When Critical illness cover suits

- You want a lump sum to clear debts after a serious diagnosis
- You have employer-provided sick pay covering shorter-term issues
- You want predictable, defined-event cover
- You want to combine it with life cover for simplicity

## When Income protection suits

- Your household relies on your income
- You have limited sick pay (especially self-employed)
- You want broader cover for any illness or injury that stops you working
- You want long-term income replacement, not just a lump sum

## Frequently asked questions

### Can I have both?

Yes — many people combine income protection (regular income) with critical illness cover (lump sum) for different needs. Affordability is the main constraint.

### Why is income protection often considered more important for the self-employed?

Because there's no employer sick pay — Statutory Sick Pay generally doesn't apply to the self-employed, so income protection fills the gap.

### Does critical illness pay out for every cancer?

Most policies pay out for the most common 'in situ' and invasive cancers under defined criteria, but very early-stage or non-life-threatening cancers may pay a lower amount or nothing. Read the conditions list carefully.

## Sources

- [GOV.UK — Consumer protection rights](https://www.gov.uk/consumer-protection-rights)
- [ABI — Statement of Best Practice for Critical Illness Cover](https://www.abi.org.uk/products-and-issues/topics-and-issues/protection/)
- [GOV.UK — Statutory Sick Pay](https://www.gov.uk/statutory-sick-pay)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.