Life insurance, critical illness cover and income protection all protect your household's finances, but they answer three different questions. Life insurance pays out if you die. Critical illness cover pays out if you are diagnosed with a serious condition specified in your policy and survive. Income protection replaces part of your salary if illness or injury stops you working. This guide compares all three, so you can see which questions matter most for your own situation.
Key takeaway: No one of these products is better than the others - they solve different problems, and the right protection depends on who relies on your income, what your employer provides and what your budget allows. Many households end up with a combination rather than a single policy.
[[stats: 98.7% = of life and terminal illness claims paid (Source: Aviva claims data, 2025) | 90.7% = of critical illness, children's benefit and total permanent disability claims paid (Source: Aviva claims data, 2025) | 90% = of income protection claims paid (Source: Aviva claims data, 2025)]]
Those percentages come from Aviva's own published claims data for 2025. Across individual protection, Aviva paid 51,222 claims totalling more than £1.3 billion: £860.7 million across 40,277 life and terminal illness claims, £388.6 million across 5,586 critical illness, children's benefit and total permanent disability claims, and £63.6 million across 4,154 income protection claims. Whichever product you are weighing up, the overwhelming majority of claims are paid.
What is the difference between life insurance, critical illness cover and income protection?
The simplest way to see the difference is side by side:
[[table: | Life insurance | Critical illness cover | Income protection ;; When it pays out | If you die, or are diagnosed with a terminal illness, during the term | If you are diagnosed with a serious condition specified in the policy and survive | If illness or injury leaves you unable to work ;; What it pays | A tax-free lump sum, or a regular income with family income benefit | A tax-free lump sum | A regular monthly income, typically 50-70% of your salary ;; What it is typically used for | Clearing the mortgage and providing for your family | Clearing debt, adapting your home, or replacing income while you recover | Covering the mortgage and bills while you cannot work ;; When it stops | At the end of the term, or on a claim | At the end of the term, or on a claim | When you return to work, or at the end of the term ]]
What does life insurance cover?
Life insurance pays a tax-free lump sum if you die during the policy term. It is most commonly set up as decreasing term cover, tracking a repayment mortgage balance, or level term cover, which pays the same amount whenever a claim is made. Our life insurance advice page covers the types in detail, and if your question is specifically about home buying, our guide on whether you need life insurance to get a mortgage answers it in full.
What does critical illness cover do?
Critical illness cover pays a tax-free lump sum if you are diagnosed with one of the conditions specified in your policy - commonly including many cancers, heart attack and stroke, though the exact list and definitions vary between insurers. The point is that you survive, but life changes: the lump sum can clear the mortgage, cover treatment or adaptations, or simply take money worries off the table while you recover. Aviva alone paid 5,586 critical illness and related claims in 2025, totalling £388.6 million. Read more on our critical illness cover page.
What does income protection do?
Income protection replaces 50-70% of your monthly income if illness or injury stops you working, and keeps paying until you are well enough to return, with many policies supporting a phased return by topping up part-time earnings. It covers the situation the other two do not: the long illness or injury you recover from, but which stops you earning for months or years.
It is worth knowing what the fallback looks like without it. Statutory sick pay is £123.25 per week, paid for a maximum of 28 weeks - a fraction of most people's outgoings. And the causes of claims are more everyday than most people expect: Aviva paid 4,154 income protection claims in 2025, totalling £63.6 million, and its data shows musculoskeletal conditions were the most common cause of claim, followed by mental health conditions and cancer. Our income protection page explains how cover can be shaped around your employer's sick pay.
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Which type of protection do you need?
There is no universal answer, because the products protect against different events. The honest starting point is a handful of questions - the same ones a mortgage broker at Quanstrom Financial will work through with you.
[[accordion: Who relies on your income?|If a partner, children or anyone else depends on what you earn, life insurance tends to move up the list, because a mortgage becomes a debt of your estate if the worst happens. If nobody depends on your income, protecting the income itself may matter more than protecting against death. ;; What would happen if you could not work for six months?|Think about how long your savings and any sick pay would actually last against the mortgage and bills. If the answer is uncomfortable, that is the gap income protection exists to fill. ;; What does your employer already provide?|Some employers offer death in service cover or generous sick pay, which changes what you need to buy privately. Bringing those details to your adviser avoids paying for cover you already have. ;; What does your budget allow?|Protection only works if the premiums are sustainable for the long term. Cover can be layered and adjusted, so a workable budget with the right priorities beats a perfect plan you cancel in a year.]]
Can you combine life insurance, critical illness and income protection?
Yes, and many households do. The products complement each other rather than overlap: for example, decreasing life cover to protect the mortgage, with income protection covering the monthly bills if you cannot work. Critical illness cover can also be added to a life insurance policy rather than bought separately. A mortgage broker at Quanstrom Financial can review what you already have, including anything through work, and recommend a combination that fits your circumstances and budget - and if the cover you already have is right, we will tell you.
Frequently asked questions
What is the difference between life insurance and critical illness cover?
Life insurance pays out if you die, or are diagnosed with a terminal illness, during the policy term. Critical illness cover pays out if you are diagnosed with a serious condition specified in the policy and survive - it protects you and your finances through the illness, rather than providing for others after your death.
What is the difference between critical illness cover and income protection?
Critical illness cover pays a one-off lump sum on diagnosis of a condition specified in the policy. Income protection pays a regular monthly income for any illness or injury that leaves you unable to work, subject to the policy terms, and keeps paying until you are back at work or the term ends. One is a lump sum for defined events; the other is ongoing income for a much wider range of causes.
Can you have life insurance, critical illness cover and income protection at the same time?
Yes. The three products cover different events, so they work alongside each other rather than overlapping. Many households layer them - for example, life cover for the mortgage plus income protection for monthly outgoings - balanced against a sustainable budget.
Do I need critical illness cover if I already have life insurance?
They cover different events, so one does not replace the other. Life insurance would not normally pay out for a heart attack or cancer diagnosis you survive, which is exactly when critical illness cover pays. Whether you need both depends on your circumstances, savings and what your employer provides - a conversation worth having with an adviser.
Is income protection worth it if I get sick pay from work?
Employer sick pay is often generous at first but time-limited, and once it ends the fallback is statutory sick pay of £123.25 per week for a maximum of 28 weeks. Income protection can be set up to start exactly when your employer's sick pay stops, so you are not paying for cover you do not need.
What conditions does critical illness cover include?
Each insurer publishes its own list of covered conditions and definitions, commonly including many cancers, heart attack and stroke among a longer list. The lists and definitions genuinely differ between insurers, which is one of the main reasons advised cover matters for this product in particular.
Does income protection cover mental health?
Income protection is generally based on being unable to do your job because of illness or injury, rather than a fixed list of conditions, subject to the policy's terms. Aviva's claims data shows mental health is among the most common causes of income protection claims, alongside musculoskeletal conditions and cancer.
Do these policies have a cash-in value?
No. Life insurance, critical illness cover and income protection are pure protection policies - they have no cash-in value at any time, cover ceases at the end of the term, and if premiums are not maintained the cover will lapse.
Written by Toby Quanstrom CeMAP, Director at Quanstrom Financial, a whole-of-market mortgage broker based in Eastbourne, East Sussex.
This article is for general information only and does not constitute financial advice. Policy terms, conditions and definitions vary between insurers, so always check the details with your adviser before making a decision. Your home may be repossessed if you do not keep up repayments on your mortgage.
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