These three policies get mentioned in the same breath constantly, and it's easy to assume they're interchangeable. They're not — each is built to respond to a genuinely different situation, and knowing which is which matters more than the marketing copy suggests.
Income protection
Income protection pays you a regular income, usually a portion of your salary, if you're unable to work due to illness or injury — typically continuing until you can return to work or reach retirement, depending on the policy. It's built to keep ongoing bills covered during an extended absence from work.
Critical illness cover
Critical illness cover pays a single lump sum if you're diagnosed with one of a specific list of serious illnesses defined in the policy — not any serious illness, only the ones listed. It suits one-off costs: clearing a mortgage, adapting a home, or simply easing financial pressure during treatment and recovery.
Life insurance
Life insurance pays a lump sum, or sometimes an income, to your dependants if you die during the policy term. It's built for the people left behind, not for you — which is why it matters most once someone else's finances depend on yours.
| Policy | Triggered by | Pays out as |
|---|---|---|
| Income protection | Unable to work, illness or injury | Regular income |
| Critical illness cover | Diagnosis of a listed illness | Lump sum |
| Life insurance | Death during the policy term | Lump sum (usually) |
Do you need all three?
It depends on dependants, debt, and how exposed your household would be without your income. Someone single with no dependants and no shared debt often needs less life insurance than someone with a mortgage and children, while income protection can matter to almost anyone who relies on their own income to cover the bills. See our broader guide on which insurance you actually need for how to prioritise.