The Basics of Critical Illness Insurance

Posted on November 19, 2015 and updated November 19, 2015 in Critical Illness, Life Insurance Canada News 4 min read
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Life is great isn’t it? You’re working hard to support your young family. You just bought your new dream home and got the promotion you’ve been waiting for. Then BAM! You’re diagnosed with cancer. What will you do then? 

If you don’t have the proper insurance coverage in place you may find yourself in a detrimental situation.

When you’re shopping for insurance you want to make sure you cover all your bases and one very important coverage is critical illness insurance – but quite often it is overlooked by both consumers and some advisors.

One of the reasons is the cost of critical illness insurance. In the past it was a hard sell because of both its cost and newness. Critical illness coverage has only existed for about 50 years; unlike life insurance which has been around for hundreds of years.

This lack of knowledge about critical illness insurance is unfortunate because everyone should have it. The main reason being that the chances of developing a critical illness in Canada are higher than dying before the age of 65.

What You Need to Know About Critical Illness Insurance

Let’s begin by taking a look at what it is and what it does. First of all, it is important to note that critical illness insurance is a living benefit and not a death benefit. So you get the money while you’re still alive if you need it.

What is Critical Illness Insurance?

This type of coverage pays out a lump sum if you’re diagnosed with a life-threatening illness (the types of illnesses covered depends on the type of policy you get). It’s very important to note that the money paid out is tax-free and you can use it however you like.

There are absolutely no restrictions. Most people use the money to pay down debt, take a vacation or pay for private treatments.

Examples of Critical Illnesses

Below are some examples of critical illnesses that this type of policy covers.

  • Stroke
  • Heart Attack
  • Medical conditions such as multiple sclerosis
  • Certain stages and types of cancer
  • Alzheimer’s disease
  • Benign brain tumour
  • Coma
  • Blindness
  • Parkinson’s disease

What About Provincial Health Care?

You may be wondering why you have to worry about needing money for treatment because we have one of the best healthcare systems in the world – so the government will take care of you. While this is true, it doesn’t necessarily mean you will get the best possible care available. 

For example, there have been amazing advancements in the treatment of various types of cancer but most government health care systems force patients to be treated by traditional methods such as radiation and chemotherapy – which have horrible physical side effects.

The Cost of Critical Illness Insurance vs Life Insurance?

Although the application process is similar for both types of insurance, critical illness insurance is more expensive. The reason why is because the chances are much higher that Canadians will make a claim on a critical illness policy than on a Life Insurance only policy.

Lucrative Critical Insurance Riders

To help compensate for the cost some Canadian insurance carriers offer some pretty lucrative riders such as a “return of premium” option. This rider insures that you get 100% of the money you paid for premiums returned if you don’t use the insurance – even if you die. 

To make sure you have proper insurance coverage for your situation, look into critical illness insurance. Ask your insurance advisor to give you the specifics about the different types of critical illness policies. But be sure to ask for specifics and find out what all your options are.

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Catherine Martinez
Catherine Martinez

Do you cover individuals in the United States?