Critical Illness Insurance

Critical illness insurance can provide a lump sum tax-free payment to you in the event that you suffer a major illness or health condition. As life expectancy increases due to improvements in the early diagnosis and treatment of conditions such as heart disease and cancer, those living with the after-effects of such health problems has increased and, for many, the burden of extra costs associated with such illnesses can be significant. Such costs can include the need to make up for lost or reduced income while you were too ill to work (or for your spouse to take care of you), paying for caregivers, modifying or purchasing new cars, houses or other equipment to support your needs to name but a few. With the Canadian Cancer Society recently reporting that the survival rate for cancer is now over 60%, with many other cancers far exceeding this rate, considering how you would cope financially in such a situation has become a pressing concern for many.

Below are some key features of critical illness insurance policies:

  • There is usually a waiting period on the policy (i.e. a time by which you must survive your illness following the initial diagnosis, before the policy will pay out). This is usually 30 days.
  • The policy usually cover illnesses such as heart attack, cancer and strokes.
  • There are no conditions on how you use the payment – once the lump sum has been made to you, you are free to use it as best suits you and your family. It is known as a “living benefit” as the lump sum is paid to you as the policy holder, instead of to a beneficiary.
  • In contrast to disability insurance, critical illness insurance is paid even if you are able to return to work following your diagnosis.

It’s more than just a payout

Coping financially with an illness is just part of the picture. Having access to emotional support and medical treatments can help your recovery.

Expert medical help

Get access to the top 5% of specialists in their fields. They can:

  • Provide a second opinion
  • Help understand medical conditions
  • Explain treatment options
  • Help navigate the health care system

Additional support

You and your family can get professional help to deal with the impact of your illness. They can provide:

  • Counselling services
  • Family support services (child care, home care)
  • Legal and financial consultations
  • Nutritional advice

Why do you need critical illness insurance?

It’s more common than you think:

  • A serious, life-altering illness affects one in three Canadians in their lifetime.

Cover daily costs:

  • Use your payout to help with your expenses while you recover.

Protect your retirement savings:

  • Don’t dip into your RRSP or other investments to pay for additional medical costs.

Focus on your recovery:

  • Concentrate on getting healthy knowing your benefit payment can help with your finances.

How much do you need?

Depending on the severity of your illness, you may need to take time off work. Let’s consider your income and expenses to determine how much coverage you need.

First, let’s look at your income:

    • How much income might you lose if you were too sick to work?
    • If your spouse had to take a leave of absence how much income would they lose?

Now, let’s look at your current expenses:

    • Mortgage or rent
    • Loans and other debts
    • Groceries and utilities
    • Credit card payments
    • Other living expenses

Lastly, keep in mind you may incur additional expenses:

    • Healthcare (hospital room, drug costs, etc.)
    • Travel for treatments
    • Childcare during treatment and recovery
    • Domestic help (live-in nurse)

These are some of the expenses that can give you an idea of how much coverage you may need. This is only the first step. A thorough needs analysis will help calculate this.

What happens if you don’t experience a critical illness?

You can add a return-of-premium benefit to your critical illness insurance policy. If you don’t experience a serious illness after, as early as 10 years, you can choose to get some or all of your money back. If you choose this option your policy expires when you take your refund.

Do you need Critical Illness or Disability Insurance?

Depending on your situation you may need only critical illness or disability insurance but there are many times when you need both to fully protect yourself. Critical illness and disability insurance work together to help reduce the impact of disability or serious illness.

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Contact me for more information and to help determine what makes the most sense in your situation.

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