Illness insurance is where the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the critical illnesses listed in the insurance policy.

The policy may also be structured to pay out regular income, and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation.

The policy may require the policyholder to survive a minimum number of days from when the illness was first diagnosed. The survival period used varies from company to company.