So, as you probably know, the critical illness pays out a lump sum if you get diagnosed with one of the conditions covered. It depends what you want to use this money for - would it be to live off? Or simply to pay off your mortgage? If you have it decreasing in line with your mortgage, that's absolutely fine if you're only planning to use it to pay off the mortgage - but if you were hoping to use it as a source of income too, then you won't want it to be decreasing.
You can get stand-alone critical illness or it can be bundled with your life cover. The life cover is reduced by the amount of critical illness which is paid out - that can be a cheaper option to consider.
Critical illness covers all the main major illnesses you're likely to get - cancer, heart attack, stroke, MS etc. The risk is that if you have one of these conditions, will you be able to return to work afterwards? If you can't return to work afterwards, you'll need a longer term plan for your income - so that means either taking out a larger lump sum for critical illness, or taking out IPB.
IPB is the more expensive type of cover and it's a lot more subjective. There will be a claims assessor like me who sifts through the medical reports to decide if you're making your best efforts to be able to work (putting it bluntly). And as I said, that will be assessed against the policy terms - not the actual job you perform. Also, a medical certificate from your GP won't trigger a payout. The company will ask for specialist reports and may ask you to attend an independent examination too. And they will then continue to request updates every few months - which may include sending you for more examinations etc.
Not trying to scaremonger, but I did this job for 15 years at a senior level - and I cannot tell you how many people were disappointed with the length of time it took for IPB claims, or the evidence needed. This is an industry standard by the way, not something that was just something that this particular insurer did. All the insurers get together regularly to talk about how to assess IPB claimants etc.
Also, this may be obvious but bear in mind IPB is an income replacement scheme - so you will have to prove your income in the 12 months prior to becoming ill. This means if you get a salary drop etc, your entitlement will be recalculated when you claim. You can't cover your whole salary either, the maximum you can get is usually 60% of your salary. Could you manage on that for the long term? If not, IPB probably isn't worth taking out as you'd have to find another job anyway and that would stop your claim.
Re the definition that applies - it will be in your policy terms. It's often labelled "definition of disability". If you are in an office job now, you should be given an "own occupation" definition, but as I said, that's your general occupation as it applies in the wider market, not your specific job at your specific company. When you apply for a policy the underwriters can opt to put an endorsement on your IPB policy which changes the definition of disability - they will do this if you are deemed to be in a high risk job. But a high risk job isn't what you think - it's about the likelihood of you claiming, based on stats.
Higher risk jobs where there are high rates of claims often have an endorsement added. Teachers for example - we had lots and lots of IPB claimants who were teachers off with stress/anxiety/depression, many of whom never returned to work. Teachers are therefore often given an "any occupation" definition when they apply for IPB which means to get a payout they must be unable to do ANY type of occupation. That's much harder to qualify for.
If you get full pay for six months, you will want IPB with a deferred period of six months or longer. None of us have a crystal ball but I guess it depends what you think there's a chance you might be off long-term sick with. Six months+ is a very long time to be off. Most of our IPB claims were either for mental health, back pain, or chronic fatigue/fibromyalgia. Critical illness wouldn't cover any of those things - so I guess it's whether you want to take the risk of not being protected against this type of chronic illnesses or not?
My personal opinion, based on everything I've seen on the inside, would be to have as much critical illness as possible, and not bother with IPB. If depression/back pain etc kept me off one job for six months or longer, I think you've got a very slim chance of successfully returning so I'd probably look for a different job. But then, I'm 45 and I'm fairly confident that I know my weak spots for health - but what I don't know is whether I'll suddenly get struck down with cancer or another major illness. That's why for me, critical illness is an absolute priority but IPB, less so.
Some people like to have IPB as well as critical illness, and I understand why as they do different things. But I'd just caution about understanding the limitations of IPB and how it's administered if you need to claim.