The Health Guide — clear answers, healthier tomorrows

    Critical illness

    Do critical illness policies pay out?

    Written by Stuart Hendy, PMI Expert and Head of Publishing, PremierPMI
    Reviewed by Ilana Eldad, Corporate PMI Specialist, PremierPMI

    Published 15 September 2026 · Last reviewed 15 September 2026 · Next review 15 December 2026 · 4 min read

    The short answer

    Yes — the large majority of claims are paid: 97.9 per cent of individual protection claims were paid in 2024, a record year with £8 billion paid, including £1.3 billion of critical illness claims at an average of £67,600. Declines usually trace to the definition not being met or to inaccurate application answers.

    PremierPMI is an insurance broker, authorised and regulated by the FCA (FRN 1029667). We may receive commission if you take out a policy. How we are funded.

    In this guide3 sections

    What to know about whether critical illness policies pay out

    1. Protection insurers paid a record £8 billion in 2024, with 97.9 per cent of individual claims paid. Read more
    2. Critical illness pay-outs reached £1.3 billion in 2024, with cancer behind most claims. Read more
    3. In 2025, 97.9 per cent of individual protection claims were paid from £7.84 billion overall. Read more
    4. Declines usually trace to the diagnosis missing the definition, a lapsed policy, or inaccurate application answers. Read more

    Thinking about whether critical illness policies pay out

    What works well

    • The large majority of protection claims are paid.
    • Decline reasons follow a small, documented set of causes.
    • The Ombudsman decides disputes free of charge.

    What to watch

    • The definition, not the diagnosis name, decides the claim.
    • A lapsed policy pays nothing regardless of the diagnosis.
    • Inaccurate application answers surface at claim, years later.

    Why the small minority of claims fail

    The verified picture: protection insurers paid a record £8 billion in 2024, with 97.9 per cent of individual claims paid; critical illness pay-outs reached £1.3 billion, with cancer behind 62 per cent of critical illness claims and the average claim paying £67,600. In 2025 the market paid £7.84 billion, again with 97.9 per cent of individual claims paid. Trade reporting of the ABI and GRiD 2025 release puts the critical-illness-specific acceptance rate at 90.2 per cent across 20,498 new claims, at an average pay-out of £69,375 (source 5). The published Ombudsman decisions show the structure of the failures that do occur: the diagnosis did not meet the written policy definition; the policy had lapsed before the diagnosis; or the application had been answered inaccurately and the insurer relied on the Consumer Insurance (Disclosure and Representations) Act 2012 to reduce or refuse the claim. Each cause maps to a prevention that sits in the buyer’s hands: read the definitions, keep the premiums paid, answer the questions with reasonable care and keep the documents.

    If your claim is declined, ask the insurer in writing which clause of the wording the decision rests on — then use the formal complaints process and, if needed, the free Ombudsman route. Whatever the specifics of whether critical illness policies pay out, the discipline that protects you is always the same: get the insurer’s position in writing, keep the documents with the policy, and make sure the people who would help you claim know the policy exists and where the paperwork lives.

    If something goes wrong

    If a claim is declined or delayed, complain to the insurer first, in writing, and ask which clause of the policy wording the decision rests on — and, for a definition dispute, exactly which part of the definition the diagnosis did not meet. The insurer must investigate and give a final response. If you are still unhappy after that response — or after eight weeks — the Financial Ombudsman Service can decide the dispute free of charge for consumers, and its protection-insurance casework regularly examines exactly these questions. [1][3] If the insurer itself fails financially, the Financial Services Compensation Scheme may protect eligible policyholders. For the wider regulatory picture, read who regulates insurance in the UK.

    1. Step 1: Read the IPID before you buy

      The Insurance Product Information Document summarises what is and is not covered; the full wording governs.

    2. Step 2: Check the definitions, not just the condition list

      Two policies listing the same condition can define it differently; the definition decides the claim.

    3. Step 3: Answer application questions with reasonable care

      Ask for clarification in writing if a question is ambiguous; keep a copy of your answers.

    4. Step 4: Note the survival period

      Most policies require you to survive a short period after diagnosis before the claim is payable.

    5. Step 5: Confirm whether combined cover pays once or twice

      On most combined life and critical illness policies the sum assured pays on the first event only.

    6. Step 6: Keep every document

      Dates, reference numbers and written decisions are what resolve disputes later.

    Related guides

    Looking at cover with PremierPMI

    PremierPMI is a specialist private medical insurance broker and the publisher of The Health Guide. If you want to talk through what this means for your own cover, you can start there.

    Or, if you would rather start here, send an enquiry and PremierPMI will contact you.

    PremierPMI is an insurance broker, authorised and regulated by the FCA (FRN 1029667). We may receive commission if you take out a policy. How we are funded.

    Common questions

    What share of critical illness and protection claims actually get paid?
    ABI and GRiD figures show 97.9 per cent of individual protection claims were paid in 2024, a record year in which £8 billion was paid across all protection policies, including £1.3 billion on critical illness claims at an average pay-out of £67,600.[4] For 2025, the market paid £7.84 billion overall, again with 97.9 per cent of individual protection claims accepted.[6] Trade reporting of that release puts the critical-illness acceptance rate at 90.2 per cent across 20,498 new claims.[5]
    What are the main reasons the minority of claims are declined?
    Published Ombudsman decisions, alongside the ABI’s own commentary, point to a small, repeated set of causes. The most common is the diagnosis not meeting the policy’s written definition — a genuine illness that falls short of the specific severity or stage the wording requires. Another is the policy having lapsed, through missed premiums, before the diagnosis occurred. A third is inaccurate application answers coming to light at claim, where the insurer relies on the Consumer Insurance (Disclosure and Representations) Act 2012 to reduce or refuse the pay-out.[2]
    How does a lapsed policy differ from a declined claim?
    A policy lapses when premiums stop and cover ends altogether, so no claim can succeed afterwards, however genuine the diagnosis, because no contract remains in force. A declined claim happens on a policy that is still active: the insurer has considered the claim and decided it does not meet the terms, usually because the diagnosis does not meet the written definition or the application contained inaccurate answers. Unlike a lapse, a declined claim can be challenged through a complaint and, if unresolved, the free Financial Ombudsman Service.[1]

    Sources and methodology

    1. [1] Financial Ombudsman Service. “Annual complaints data and insight 2024/25”. Published 2 July 2025. View source(opens in a new tab)Primary source
    2. [2] UK Parliament (legislation.gov.uk). “Consumer Insurance (Disclosure and Representations) Act 2012”. Published Enacted 8 March 2012. View source(opens in a new tab)Primary source
    3. [3] Financial Ombudsman Service. “Final decision DRN-6204112 (critical illness claim declined — CIDRA qualifying misrepresentation)”. Published Accessed 15 September 2026. View source(opens in a new tab)Primary source
    4. [4] Association of British Insurers and GRiD, reported by Cover Magazine. “Insurers paid £8bn in protection claims in 2024”. Published Accessed 15 September 2026. View source(opens in a new tab)Primary source
    5. [5] Association of British Insurers and GRiD, reported by Cover Magazine. “Protection insurers paid £7.84bn in 2025”. Published Accessed 15 September 2026. View source(opens in a new tab)Primary source
    6. [6] Association of British Insurers. “Protection insurers pay out £7.84 billion to help customers safeguard their finances”. Published 29 June 2026. View source(opens in a new tab)Primary source

    We cite primary sources wherever possible. Read about our sourcing methodology.

    Written by

    Stuart Hendy

    PMI Expert and Head of Publishing, PremierPMI

    • 20 years in UK private medical insurance
    • Underwriting and corporate placement specialist

    Stuart brings over 20 years of experience advising on UK private medical insurance. He is a key member of the private medical insurance team and Head of the Publishing Team, gathering detailed client requirements, liaising with insurers on tailored quotes, and running training on insurer product changes and underwriting nuance.

    Read full profile

    Reviewed by

    Ilana Eldad

    Corporate PMI Specialist, PremierPMI

    • ACCA-qualified
    • Corporate and SME scheme specialist

    Ilana oversees business health insurance schemes for the corporate and SME team, guiding employers from initial quotes through claims and renewal. ACCA-qualified, she applies that financial background to reducing premiums and advising on tax-deductibility, and runs the largest corporate portfolio at PremierPMI.

    Read full profile

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