Critical Illness insurance is one of the most misunderstood forms of coverage, yet it provides vital financial protection. Unlike other types of insurance, Critical Illness insurance offers a lump sum payment upon diagnosis of specific illnesses. You can use this payout however you wish—whether to cover medical bills, household expenses, or even to take time off work.
With a 35% chance of developing a critical illness before the age of 65 and a 65-70% likelihood by age 81, the need for this coverage is evident. Common conditions covered include cancer, stroke, heart attack, Parkinson’s disease, and major organ transplants, among many others.
However, Critical Illness insurance comes with a price. Premiums can reach hundreds of dollars per month, making it one of the more expensive types of coverage. Instead of debating whether you need it, the real focus should be on how to reduce those costs. While obvious factors like maintaining good health, staying in shape, and not smoking help lower premiums, there are other, less-known strategies to explore.
In this article, we’ll dive into practical ways to make Critical Illness insurance more affordable without sacrificing the protection it offers.
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1. Consider a Bundle Policy – Life Insurance with Critical Illness Advance Payout: Opting for a combined life and critical illness policy may be more cost-effective since it lowers administrative costs for the insurer. Compare a combo policy with two separate plans to assess how much you can actually save. 2. Backdate Your Policy for Lower Premiums: This is a lesser-known strategy where you can backdate your policy to lock in a lower age bracket and, therefore, lower rates. While you’ll need to pay premiums from the backdated start, this could save up to 5-10% on future premiums. 3. Exclude Pre-Existing Conditions for Lower Rates: Some policies allow you to exclude specific conditions, like loss of vision, to reduce premiums. This lowers the risk for the insurer, which may offer you a more affordable rate. 4. Tailor Your Policy to the Critical Illnesses You Want Covered: Different plans offer coverage for various conditions. For example, if there’s a family history of cancer, you may want to ensure it’s included in your policy. Some plans offer coverage for just four illnesses (cancer, heart attack, stroke, coronary artery bypass surgery), while others cover over 20 illnesses, including Parkinson’s disease, paralysis, and loss of limbs or speech. | Expert tip from Paul Pinel I’m convinced that the story around critical illness insurance resonates more today with consumers than ever before, but the product is still not getting into the hands of enough Canadian families. We should recognize that the families who may be most impacted financially by a critical illness diagnosis, are also the ones trying to stretch every dollar that isn’t purchasing as much of their household needs as it used to. While a permanent or term to 75 CI product would be ideal for everyone, we can’t let the cost of entry to those products be a barrier. Term 10 CI is a very affordable way to get the initial coverage in place and can still be converted to a longer duration plan down the road as financial obligations of raising a family ease. Generally, the first couple of renewals on a term 10 coverage are at a much lower multiple than what a comparable term 10 life policy would renew at. |
1. Consider a Bundle Policy – Life Insurance with Critical Illness Advance Payout: Opting for a combined life and critical illness policy may be more cost-effective since it lowers administrative costs for the insurer. Compare a combo policy with two separate plans to assess how much you can actually save.
2. Backdate Your Policy for Lower Premiums: This is a lesser-known strategy where you can backdate your policy to lock in a lower age bracket and, therefore, lower rates. While you’ll need to pay premiums from the backdated start, this could save up to 5-10% on future premiums.
3. Exclude Pre-Existing Conditions for Lower Rates: Some policies allow you to exclude specific conditions, like loss of vision, to reduce premiums. This lowers the risk for the insurer, which may offer you a more affordable rate.
4. Tailor Your Policy to the Critical Illnesses You Want Covered:
Different plans offer coverage for various conditions. For example, if there’s a family history of cancer, you may want to ensure it’s included in your policy. Some plans offer coverage for just four illnesses (cancer, heart attack, stroke, coronary artery bypass surgery), while others cover over 20 illnesses, including Parkinson’s disease, paralysis, and loss of limbs or speech.
I’m convinced that the story around critical illness insurance resonates more today with consumers than ever before, but the product is still not getting into the hands of enough Canadian families. We should recognize that the families who may be most impacted financially by a critical illness diagnosis, are also the ones trying to stretch every dollar that isn’t purchasing as much of their household needs as it used to. While a permanent or term to 75 CI product would be ideal for everyone, we can’t let the cost of entry to those products be a barrier. Term 10 CI is a very affordable way to get the initial coverage in place and can still be converted to a longer duration plan down the road as financial obligations of raising a family ease. Generally, the first couple of renewals on a term 10 coverage are at a much lower multiple than what a comparable term 10 life policy would renew at.
For example, for RBC Insurance Critical Illness Insurance: you can choose between a policy two major policies covering 4 and 25 critical illnesses respectively:
| Basic policy: covers 4 Critical Illnesses | Critical Illness Recovery Plan: covers 25 Critical Illnesses |
| BASIC COVERAGE · Cancer (life-threatening) · Coronary artery bypass surgery · Heart Attack · Stroke | BASIC COVERAGE · Cancer (life-threatening) · Coronary artery bypass surgery · Heart Attack · Stroke ENHANCED COVERAGE · Aortic Surgery · Aplastic Anaemia · Bacterial Meningitis · Benign Brain Tumour · Blindness · Coma · Deafness · Dementia including Alzheimer’s Disease · Heart Valve Replacement or Repair · Kidney Failure · Loss of Independent Existence · Loss of Limbs · Loss of Speech · Major Organ Failure on Waiting List · Major Organ Transplant · Motor Neuron Disease · Multiple Sclerosis · Occupational HIV Infection · Paralysis · Parkinson’s Disease and Specified Atypical Parkinsonian Disorders Severe Burns |
Find out more about critical illness insurance coverages in this article.
5. Make Annual Payments Instead of Monthly:
Choosing to pay your premium annually rather than monthly can result in lower overall costs, as insurers save on administrative tasks and pass on the savings to you.
6. Convert Critical Illness Coverage into a Savings Plan with a Return of Premium Rider:
This option allows you to pay higher premiums upfront, but if no claims are made, you get your premiums back after a set period (e.g., 20 years). While it increases your short-term costs, it can turn into a forced savings mechanism in the long term.
7. Age Rounding Can Affect Your Premiums: Be mindful of when you purchase your critical illness insurance. If you’re nearing a birthday, buying the policy earlier in the year can keep your age “rounded down,” reducing your premiums compared to waiting until your birthday, when your age is rounded up.
8. Trim Unnecessary Benefits:
Remove extras like waiver of premiums, or riders like return of premium on death or child illness coverage, if they aren’t important to you. This can make your policy more affordable by focusing on only the coverage you need.
9. Check Return of Premium Options:
Some policies offer full or partial premium returns after a certain period. It may cost more upfront, but the benefit of getting your premiums back makes it a worthwhile consideration. Have your broker do the math to see if this option suits you.
10. Gender Influences Rates:
Unlike life insurance, men may find critical illness insurance to be more affordable compared to women, who tend to live longer but are statistically more prone to certain illnesses. This can lead to potential savings for male applicants.
In addition to the various strategies we’ve discussed to save on Critical Illness insurance, don’t overlook potential discounts tied to your employment, union membership, or university alumni status. These affiliations can sometimes offer exclusive benefits or reduced rates.
Moreover, the key to securing the best deal is to compare policies thoroughly. Different insurers have varying pricing structures and coverage options, so taking the time to compare can lead to significant savings.
For personalized advice and to explore all the options available, reach out to our experienced Critical Illness Insurance team. With expertise across most products on the market and relationships with more life insurers than many brokerages, we can help you find the best critical illness insurance tailored to your needs. Contact us today for a comprehensive discussion and start saving on your premiums.
