Critical illness insurance is a type of insurance product that covers you financially if you’re diagnosed with a serious illness. Should you fall ill or suffer an injury, critical illness insurance will pay out a one-time, tax-free benefit to cover you financially through this period.
In an age where health uncertainties can disrupt the best-laid plans, this insurance solution is a powerful shield against the unexpected. It’s more than just a policy; it’s a lifeline that ensures your dreams and financial stability remain intact, even in the face of life’s most challenging moments.
In this blog post, we will discuss all you need to know about critical illness insurance in Canada, why it’s become an essential component of comprehensive financial planning, and why you should buy one for yourself.
Let’s get into it.
What is Critical Illness Insurance?
Critical illness insurance is a financial safety net that provides a tax-free payment if you’re diagnosed with a serious illness covered by your policy. Unlike traditional life insurance, which pays benefits after your death, critical illness insurance is designed to protect you during your lifetime.
It offers coverage for various serious illnesses such as cancer, heart attack, stroke, organ transplant, and major organ failure. In times of health challenges, it provides financial security, allowing you to focus on your well-being instead of worrying about finances.
When you are diagnosed, you receive a tax-free lump sum payment, typically after a waiting period, which is usually 30 days but can be longer, like 90 days.
This payout can help cover medical expenses associated with serious illnesses not covered by regular insurance. Moreover, you can use the money for non-medical expenses such as childcare, giving you flexibility in how you use it.
Critical illness policies can vary. Some cover a limited number of illnesses, while others protect against a wide range of medical conditions, and the benefit amount depends on the severity of your illness. More serious conditions usually result in a full benefit payout, while less severe ones may only receive partial payment, and treatable conditions might not provide any benefit.
How Does Critical Illness Insurance Work?
Critical illness insurance is a financial safety net that offers you peace of mind in the face of serious health challenges. Critical illness insurance operates much like other types of life insurance. You make regular payments to the insurer, and in return, they promise coverage in case of illness or injury.
Critical illness insurance is also known by various names like heart attack insurance, stroke insurance, or cancer insurance, and you can either purchase it as a separate policy or as an add-on to your existing life insurance.
This insurance can assist with both medical and non-medical expenses. On the medical side, it can help cover deductibles, co-pays, prescription medications, upgraded medical facilities, and alternative treatment options.
It’s not limited to medical expenses; critical illness insurance can also help with non-medical costs such as replacing lost income for yourself or your spouse, homecare or modifications, debt repayments, travel expenses, and childcare during your recovery.
You can get basic critical illness insurance policies that cover a few conditions to comprehensive ones that protect against as many as 26 conditions. Some plans offer payouts of $25,000, while others can provide as much as $500,000 in case of critical illness.
Is Critical Illness Insurance Worth It?
Critical illness insurance is a deeply personal decision, even more so than life insurance. While life insurance is primarily about providing for your family’s needs, critical illness insurance focuses on your financial well-being during your recovery.
Recovering from life-threatening illnesses often requires extended care, including multiple hospital visits beyond the initial stay. Critical illness insurance steps in to ease some of the financial burdens during this recovery period, allowing you to concentrate on regaining your health instead of worrying about dwindling income or added expenses.
In Canada, where the average life expectancy is 83 years, and healthcare is world-renowned and free, it’s still undeniable that lengthy treatments can take a toll on your finances.
Consider these questions:
- If I were to face a critical illness, could I cover out-of-pocket expenses without depleting my savings?
- Would I be able to maintain my lifestyle while taking time off work due to a serious illness?
If you answer ‘No’ to these questions, critical illness insurance might be a wise choice. This is especially relevant for those at a higher risk of critical illness, whether due to their lifestyle choices or family medical history.
What Does Critical Illness Insurance Cover?
The medical conditions covered by your critical illness insurance depend on your policy and insurer.
Critical illness insurance can protect against a range of life-threatening diseases and medical conditions. The number of conditions in your policy can vary, starting from one specific condition and going up to more than 25.
Some policies require no survival period, while most have a 30-day survival period. Additionally, policies may cover you for a fixed term (e.g., 10 years) or for a lifetime.
Some insurers offer affordable basic plans but only cover cancer, and comprehensive plans that are pricier and offer broader coverage, sometimes including over 25 conditions.
Remember that the number of covered conditions differs from one insurance company to another. If you’re seeking coverage for a particular illness, exploring products from various providers is a good idea. Some common conditions covered include:
Accident and Functional Loss
- Loss of Independent Existence
- Loss of Speech
- Severe Burns
- Loss of Limbs
- Major Organ Transplant
- Kidney Failure
- Major Organ Failure on Waiting List
- Heart Attack
- Coronary Artery Bypass Surgery
- Heart Valve Replacement or Repair
- Aortic Surgery
- Stroke (Cerebrovascular accident)
Cancers and Tumours
- Cancer (Life-Threatening)
- Benign Brain Tumour
Health Insurance Vs Critical Illness Insurance
Health insurance and Canada’s healthcare system provide some coverage for recovery from critical illnesses, such as hospital stays and employment insurance benefits. However, this coverage is often limited and not as comprehensive as what an individual critical illness policy offers.
For instance, health insurance only pays a certain percentage of medication costs or rehabilitation materials and adjustments. So, if you require home modifications for your recovery, critical illness insurance can be invaluable.
Regular health insurance coverage may cover only a fraction of these modifications or not cover them at all.
Moreover, if your health insurance is provided through your workplace benefits, your coverage is typically tied to your employment status. If you lose your job, you may lose your health insurance along with it.
It is important to note that health insurance and Canada’s healthcare system provide essential coverage; critical illness insurance offers a more comprehensive safety net, ensuring that you receive the support you need during challenging times, regardless of your employment status.
How Much Does Critical Illness Insurance Cost in Canada
Just like other types of life insurance, the premium rates for critical illness insurance policies are personalized to each applicant. The cost of critical illness insurance depends on several key factors:
- Age: The cost of critical illness insurance increases as you age. As you age, your risk of suffering an injury or developing a critical illness rises.
- Gender: Men and women statistically have different health risks at different life stages, which can impact your premium.
- Family’s Medical History: Certain diseases, such as diabetes, can run in families. If you have a family history of specific illnesses, you might pay more for coverage.
- Smoking Status: Smokers typically face significantly higher rates than non-smokers due to their increased risk of various health conditions like diabetes and cancer.
- Lifestyle: Engaging in dangerous hobbies or working in risky professions (e.g., skydiving or truck driving) can lead to higher premium rates.
- Pre-existing Conditions: If you have pre-existing medical conditions, your premium may be higher, or certain conditions might be excluded from coverage.
- Number of Illnesses Covered: The comprehensiveness of your policy also affects the premium. Some plans offer basic coverage for only a few conditions, while others provide extensive coverage for up to 26 conditions. More comprehensive policies generally come with higher premiums.
- Coverage Amount: Your premium is closely tied to the benefit amount. If you need a larger payout, your premium will also be higher. For instance, young individuals who require a modest benefit may pay around $10 a month, while older applicants seeking substantial coverage may pay 10-12 times that amount or more.
- Policy Term: The length of your policy term can also affect rates. Longer terms may lead to higher premiums but could save you money over time.
What is the Best Critical Illness Insurance Company in Canada?
Choosing the right critical illness insurance provider and policy depends on your specific situation, risk tolerance, age, health, and financial capacity. Several top insurance companies in Canada offer distinct policies tailored to individual critical illness coverage needs. Having the freedom to choose and being informed about your options empowers you to select the policy and provider that aligns with your unique circumstances.
PolicyMe offers the best critical illness insurance in Canada. Their critical illness insurance policy covers 44 conditions and is Canada’s most affordable critical illness insurance coverage.
Introducing PolicyMe Critical Illness Insurance, the latest addition to their exceptional lineup. Backed by Canadian Premier, it's incredibly simple to purchase. Get a free quote online, choose your terms and coverage amounts, and enjoy coverage for 44 illnesses. PolicyMe has your back.
- Backed By Canadian Premier
- Commission-Free Advise
- 44 Critical Illnesses Covered
- Variable Coverage Options
- Quick Online Application
- Not Available In Some Provinces
- It Does Not Cover All Conditions
- There is no Cash Value
Here are some of the other critical illness insurance providers in Canada:
- Manulife Critical Illness Insurance
- Equitable Life Critical Illness Insurance
- iA Critical Illness Insurance
- ivari Critical Illness Insurance
- Foresters Financial Critical Illness Insurance
- Empire Life Critical Illness Insurance
- BMO Critical Illness Insurance
- Beneva Critical Illness Insurance
- Desjardins Critcal Illness Insurance
How Much Critical Illness Insurance Do You Need?
When deciding how much critical illness insurance to purchase, several personal factors come into play. These include replacing lost income, covering healthcare and home modification expenses, and unexpected costs during your recovery.
To determine how much critical illness insurance you may need, start by examining your current expenses: mortgage payments, car loans, potential out-of-pocket medical bills, travel expenses, and more. If you can comfortably cover these expenses in the short term without insurance, you may not need critical illness coverage.
However, it’s important to note that most Canadians lack substantial savings to handle these costs without a steady income, and critical illnesses often lead to work interruptions.
So consider your financial obligations, outstanding debts, lifestyle changes, medical expenses, existing coverages, and risk tolerance. And remember, it’s crucial to purchase only what you can afford. A lapsed policy due to insufficient funds provides no protection to anyone!
- 9 Best Life Insurance Companies In Canada: Compare Quotes
- Whole Life Insurance in Canada: Get The Best Rates & Quotes
- Understanding Group Life Insurance: Benefit & Downsides 2023
- What Is No Medical Life Insurance? Why Should You Buy One?
- What Is Permanent Life Insurance And Why Buy It? (2023)
Final Thoughts on Critical Illness Insurance
Critical Illness Insurance is not just about protection; it’s about securing your peace of mind and ensuring that life’s uncertainties don’t disrupt your financial stability. With this insurance, you can secure your financial future, ensuring that you and your loved ones are protected in times of need.
Explore your options, compare policies, and find the right Critical Illness Insurance coverage for your peace of mind. Your health and financial security are worth the investment.
If you have questions or need assistance in choosing the right policy, feel free to reach out to our trusted insurance advisor. They can provide personalized guidance to ensure you make an informed decision.