The fundamental difference
Income protection pays a regular monthly income — typically 50–70% of your gross salary — for as long as you remain unable to work due to illness or injury. It doesn't matter what the condition is. If you can't work because of depression, a bad back, long COVID, or any other condition, income protection pays out.
Critical illness cover pays a one-off lump sum if you're diagnosed with a specified serious illness from a list — typically cancer, heart attack and stroke as a minimum, plus dozens of other conditions in more comprehensive policies. It pays out on diagnosis, regardless of whether you're able to return to work.
Income protection: how it works
You choose a benefit amount (typically 50–70% of gross earnings), a deferred period (1, 3, 6 or 12 months — the waiting period before payments start), and a policy term (short-term policies pay for up to 1–2 years; long-term policies pay until you return to work, reach retirement age, or die).
The definition of incapacity matters hugely. "Own occupation" definitions (unable to perform your specific job) provide the strongest protection. "Any occupation" definitions (unable to do any job at all) are weaker and more commonly applied by cheaper policies.
Income protection pays a regular income, making it ideal for covering ongoing monthly costs — mortgage/rent, utilities, food, and other regular expenses you can't stop.
Critical illness cover: how it works
You choose a lump sum amount (commonly £100,000–£500,000) and a policy term. If you're diagnosed with a covered condition during the term, the lump sum is paid tax-free. You can use it for anything — paying off your mortgage, funding private treatment, clearing debts, or simply providing financial breathing space.
The breadth of conditions covered and the specific definitions used vary enormously between policies. Some "cancer" definitions exclude early-stage cancers; some policies cover significantly more conditions than others. A critical illness broker will compare actual policy terms, not just headline condition counts.
Which do you need?
The honest answer for most people: both, if budget allows.
Income protection covers any illness or injury that stops you working — including conditions like musculoskeletal problems, mental health issues, and long-term conditions that may not be covered by critical illness policies. It replaces your income on an ongoing basis.
Critical illness cover pays a lump sum for serious diagnoses — giving you capital to pay off your mortgage or fund major expenses, even if you return to work within a few months.
If budget only allows for one, income protection is generally considered the higher priority by most financial planning professionals — because it has broader eligibility and addresses the fundamental risk of losing your income. But the right answer depends on your specific financial situation, existing employer sick pay, savings buffer, and mortgage/debt position. An independent protection adviser will assess your circumstances and recommend the right combination.
What either policy will NOT cover
Both policies typically have exclusions for pre-existing conditions (though the extent varies), and income protection excludes self-inflicted injury. Redundancy is not covered by either — that's a separate product called redundancy insurance or payment protection insurance.