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What is Critical Illness Insurance?

By April 20, 2020 March 23rd, 2021 Advisor, Blog, Consumer, News
What is Critical Illness Insurance

We are becoming more aware that regular changes to diet and exercise can go a long way to extending our lives, and even, preventing common illnesses. Medical advances are also helping to positively change the outcomes of some of these diseases. That being said, we cannot ignore the fact that there is a high percentage of cancer and cardiac disease in our country.

Since Canadians are living longer as a result of today’s medical advances this means that critical illness rates are also on the rise.

Critical illness is defined as an illness that is life altering. These statistics highlight the prevalence of common critical illnesses in Canada:

  • About 1 in 12 Canadians is living with heart disease.1
  • Approximately 1 in 2 Canadians will be diagnosed with cancer in their lifetime.2
  • About 741,800 Canadian adults live with the effects of a stroke (that’s the population size of New Brunswick!).3

Along with making better lifestyle choices, more Canadians should consider their options for planning for the future. How will you financially protect your loved ones if you were diagnosed with a critical illness? Would you be able to cover costs related to the illness — including medical care, travel expenses or wages of a family member leaving work to help? Critical illness insurance is an important part of planning for the future and having peace of mind today.

So, what is critical illness insurance you may ask?

Critical Illness Insurance provides a lump sum payment – a living benefit – if you are diagnosed with a specified covered illness.With critical illness insurance you can worry less about finances and just focus on getting better.

The purpose of this kind of insurance is to cover costs related to the illness that you have. However, the lump-sum can be spent on anything you want, since there are no restrictions on how you use the money.

The lump-sum received from critical illness insurance can provide relief by helping you with medical care (the Canadian government may not cover all of these expenses), bringing in additional help at home while you’re undergoing treatment, replacing any lost income, and more.

What illnesses are covered by critical illness insurance?

Critical illness is diverse, but that doesn’t mean that all of these diseases/conditions will be covered by your insurance policy. Depending on your insurance provider different illnesses will fall under your policy.

7% of critical illness insurance claims (not all are listed here) include 4:

  • Blindness
  • Major organ transplant
  • Multiple sclerosis
  • Paralysis
  • Parkinson’s disease

However, the vast majority of critical illness insurance claims (over 90%) are represented by cardiac and cancer claims including 4:

  • Heart disease (Including Heart Attack, Heart Valve Replacement or Repair, Aortic Surgery, Stroke, Coronary Artery Bypass Surgery)
  • Cancer (Including Aplastic Anemia and Benign Brain Tumor)

How does critical illness insurance work exactly?

To qualify for critical illness insurance and to determine your premiums, some insurance providers will require you to complete a medical exam. These providers will offer coverage for a range of illnesses which you pay premiums for that you may not want or need to be covered for. While, other insurance providers offer no medical options, and may ask eligibility questions with no medical exam or tests required (this is great news if you don’t like needles!).

After this process, your insurance provider will tell you which policies you qualify for. Usually, critical illness insurance lumps major conditions such as cancer, heart attack and stroke all under one policy. This means you may be ineligible if you had any one of these conditions in the past.

Fortunately, even if you have had a pre-existing condition there are more flexible insurance options on the market that will allow you to decide if you want to be covered for heart disease or cancer, or both. These flexible options can make your premiums much more affordable.

In order to benefit from critical illness insurance, you will need to pay premiums through-out the term of your insurance policy. As long as you pay these premiums then you will receive a lump-sum if faced with a critical illness listed under the policy you qualified for.

However, if you pass away during the survival period, your beneficiary will receive the lump-sum if the insured purchased an optional benefit called a Return of Premium upon Death (ROPD). The survival period is the length of time a person must survive after being diagnosed with the critical illness before making a claim.

Factors determining the cost of critical illness coverage

The way insurance providers determine how much your premiums will be for critical illness insurance coverage depend on a few factors. Usually the cost depends on your age, medical condition, the amount of coverage, the number of illnesses covered by the policy, and the insurance provider.

We understand that it may be easy to dismiss the idea of getting a critical illness while you’re young and healthy but waiting can be costly. Thinking ahead is beneficial because it’s easier to get critical illness insurance when you’re younger and healthier.

Doing so later, may make it difficult to qualify or your premiums may be higher. Your ability to qualify and the cost of premiums changes as your health changes. Premiums become higher as you get older because your chances of getting an illness also increase.

Even changes in the health of your parents and siblings can affect your premiums. For example, if someone in your immediate family has cancer it may increase your premiums since it makes it more likely that you will suffer from a similar illness.

How much coverage do you need?

The amount of coverage you need is based on your current lifestyle, expenses and financial commitments. When deciding how much coverage you need, think about what wages would be lost if you were unable to work due to critical illness. Try this calculator to find out.

With a temporary loss of income and expenses to be covered – having this financial security can provide tremendous relief during a most stressful time.

Is it really worth buying critical illness insurance?

Progress is being made for better medical technologies, but it is still better to be prepared in case you were diagnosed with a critical illness.

You need to ask yourself if the unexpected did happen and you were facing a critical illness such as cancer, heart disease, or stroke, how would you and your family stay afloat?

Since recovery time can be unpredictable, relying on work benefits or Employment Insurance may not be enough. Typical Disability Insurance won’t cover you if you are deemed able to work, there’s a chance your work benefits may be capped, and depending on the province you live in Employment Insurance can only last a maximum of 15 weeks. You may need additional financial help beyond these sources to get through this difficult time.

The possibility of being unable to work due to critical illness means you may need other ways of replacing your salary to pay for your own living expenses and financial commitments. If your family depends on your salary, then it is probably a good idea to have protection in place in case you can’t work as a result of a critical illness.

Critical illness insurance is specifically designed with a deep understanding of the ways that being financially prepared can decrease stress during a difficult time in your life. By purchasing critical illness insurance, you will have peace of mind that if you were diagnosed with a critical illness, you will be protected.

Is critical illness insurance right for you?

Critical Illness Insurance can be an important part of your overall financial planning. However, it is only one piece of the puzzle, it is still advisable to look into purchasing life insurance to fully protect your loved ones.

For a no-obligation critical illness insurance quote, speak with your advisor or contact Canada Protection Plan.
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Canada Protection Plan is one of Canada’s leading providers of No Medical and Simplified Issue Life Insurance. Our mission is to provide reliable protection and compassionate service from coast to coast with easy-to-purchase life insurance, critical illness insurance and related products. Our expanding product choices will help you get the coverage and peace of mind you need for a better financial future. Canada Protection Plan products are available through over 25,000 independent insurance advisors across Canada.
To learn more about Canada Protection Plan and our line of comprehensive No Medical and Simplified Issue life insurance solutions, call Broker Services at 1-877-796-9090 and we will be happy to assist you or put you in contact with Sales support in your region.

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