If you are looking to insure yourself against a critical illness, current taxation rules allow the proceeds of any claim to be paid tax free, allowing you to receive a full payout of the sum assured as agreed in the policy wording. Under current tax rules because critical illness contracts are term polices in force for a set period e.g. 20 years and the policy has no surrender value at any time they are deemed as "qualifying polices" and will be exempt from income and capital gains tax.
Life insurance companies will submit standard policy wordings to HMRC so that they can be certified as qualifying and will also ensure that any adjustments made to the policies during the policy term e.g an increase in the sum assured in line with RPI will not compromise the tax status.
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