We compare the life satisfaction of individuals aged above 50 years reporting or not reporting long‐term illnesses. Our econometric findings show that the positive income/life satisfaction gradient is steeper for individuals with at least one long‐term illness, especially those lacking private insurance or reporting above mean unmet medical needs. We also use the compensating variation approach and show that the marginal utility of income (net of the absolute and relative income effects) for the long‐term ill is significantly larger than the average marginal utility of income in the sample.