12 Reasons to Buy Critical Illness Insurance

Posted on October 17, 2016 and updated March 19, 2019 in Life Insurance Canada News 6 min read
reasons to buy critical illness insurance

Critical Illness (CI) insurance will pay you a tax-free lump sum of cash if you are diagnosed with a serious illness. You can choose which illnesses are covered and in some cases, you might be allowed to choose regular payments instead of a lump sum. This money can be used for anything you like.

The policy may require you to survive a certain length of time from when the illness was first diagnosed. Other terms and conditions may also apply, so read the contract carefully to ensure you understand your coverage.

Here are 12 reasons to include Critical Illness insurance in your financial plan.

1. Receive cash back

After a specified amount of time, you may be eligible to have a portion of your premiums returned. Certain conditions apply and vary between companies, but generally, if you don’t make a claim and don’t think you will, you can cancel your policy and receive a percentage of the premiums you have paid over the years.

2. Purchase when you are healthy

It is best to buy Critical Illness insurance while you are healthy. Once you have been diagnosed with an illness, you are no longer eligible. Processing a CI application is more difficult than underwriting other types of life insurance policies. To qualify, you must be healthy and you must have a healthy family medical history. You could be disqualified if there are any factors indicating you may be at risk of developing a serious medical condition.

3. Tax free lump sum payment

When you make a claim, you are paid a tax free, lump sum in the amount of your coverage. Some policies will allow you to receive instalments. The money is tax exempt if premiums were paid with after-tax dollars, which is usually the case with a policy you own by yourself. If you have a group plan with your employer, your benefits may be taxable because the premiums were paid before taxes were deducted from your pay.

4. One less worry

With Critical Illness coverage, you have one less thing to worry about. You are allowed to take the time you need to recover without worrying about daily expenses or the additional costs of medical services not covered by your provincial health plan. The insurance company doesn’t stipulate how the money can be used, so you can use it in any way you like.

5. Additional coverage

Critical Illness coverage provides you with the extra protection you don’t get from other types of policies. With most policies, you are buying protection and peace of mind for your beneficiaries. Critical Illness insurance helps you in case a serious illness prevents you from working. You can buy a policy that will only make your mortgage payments, however, these types won’t help with your other bills and usually only cover you in case of heart attack, stroke or cancer. A Critical Illness policy will cover these as well as 22 other common conditions.

6. Not included in most employee group plans

Most group plans offered by employers don’t include Critical Illness coverage. In the rare cases where it is included in a group policy, the cover amount is generally no where near the recommended amount.

7. Best Doctors

Critical Illness insurance allows you access to Best Doctors. Best Doctors is a group of the best Doctors worldwide that are experts in specific areas of medicine. Once a claim is made, your file is put before a panel of Doctors to review and determine whether the diagnosis is correct and the chosen course of treatment is the most suitable for the diagnosis.

8. Coverage for children

It’s sad but true, children can also develop a serious illness. When this happens, you will want to take time off work to be with your child or hire someone to help with the extra care the child needs. Critical Illness coverage can be purchased for children to help with the loss of your income or extra expenses incurred. Some insurance providers will cover people from only 30 days old and allow you to insure your child for up to five illnesses. Adults can be covered for about 25 illnesses. Policies, terms and conditions vary from one company to another and change when the child turns 18.

9. Peace of mind

A Critical Illness policy gives you peace of mind. You never want to think something will happen, but if it does, you can rest assured your bills will be covered even if you have to be off work for several months or even a year. You might never be able to return to work. The policy is underwritten during the application process, so you know right away if you have been approved or not. This means no surprises at claim time.

10. The best time to buy is now

The cost of Critical Illness insurance policies will never decline. As with other types of insurance, your premiums are largely based on your age. The older you get, the more the cost will increase. So the best time to get coverage is now, when the thought is still fresh in your mind.

11. Men may qualify for lower premiums than women

Unlike most life insurance policies, men may actually qualify for better rates with Critical Illness insurance than women. The reason for this is because women have longer life spans, therefore get a break on life insurance, but they have higher mobility levels putting them at a higher risk for developing a serious illness.

12. Discounts for alumni

Many Canadian universities offer valuable perks to their alumni, including discounts on life insurance. The universities have formed alliances with various insurance companies making these discounts possible. Some of the universities making this offer include Carleton University, McGill University and York University.

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