Critical Illness Insurance: A Great Financial Help when you Need it the most.
If you’re lucky, you may never have needed to use critical illness insurance. You might not have even heard of it. However, critical illness insurance might be your only line of defense against financial ruin in the event of a major health emergency like cancer, a heart attack, or a stroke. The high costs of treating life-threatening illnesses are typically more than any plan will pay for, despite the common misconception that having a standard health insurance plan provides complete protection.
If you believe that you wouldn’t be able to cover all the costs that could result from being diagnosed with a covered critical illness, such as some medical bills and living expenses, you might need critical illness insurance. If you need to take time off work to recover, it may also help to protect you from income loss. In this article, we are going to explore what critical illness insurance offers to Canadians and whether you and your family should give it some thought.
Why You May Need Critical Illness Insurance
You might have access to provincial government health plans that help pay for some of your medical costs if you are a Canadian or currently reside in Canada. How will you handle the additional costs and challenges that come with a diagnosis of a life-altering illness, such as cancer, a stroke, a heart attack, or dementia? In such a situation, critical illness insurance can be beneficial.
It may be worthwhile to spend some time researching this kind of policy because medical expenses are a common reason for bankruptcy in Canada, especially if you have a family history of special diseases. Should you become too ill to work, critical illness insurance may help to reduce some of your financial anxiety.
Also read: Do I really need Critical Illness Insurance? All You Must Know.
What Is Critical Illness Insurance?
Let’s start by defining critical illness insurance. A critical illness insurance policy is a contract between the insurer and the insured person that in an event of a life-threatening covered illness during the policy’s duration, the insurer will pay the agreed tax-free lump sum amount to the insured.
At the time of purchasing the policy, both parties agree on the coverage length, amount, and covered illnesses. Another important aspect of this insurance policy is that the payout of the lump sum is conditioned on the insured person’s 30-day survival period after being diagnosed with a critical illness. The insurance provider pays the amount after receiving valid proof of the policyholder’s illness. You can use this money for anything, including:
- Paying for medical procedures or prescription drugs that are not covered by your provincial or territorial health plan.
- Paying for your living expenses, such as your rent or mortgage, utilities, food, etc.
- Hiring a housekeeper or caregiver to assist you with your daily tasks.
- Modifying your house or car to make them more easily accessible.
- Searching for experimental or alternative treatments that may not be offered in Canada.
- Vacationing or accomplishing a personal goal.
Say, for instance, that you have $250,000 in coverage for your critical illness insurance policy. You will be qualified to receive this sum once you are determined to have a condition that qualifies as a life-threatening illness or a covered condition under the terms of your policy.
You need to wait a predetermined amount of time (called survival period) after submitting your payout request. For these kinds of policies, the typical survival period is 30 days. Your entire coverage amount would be paid out after you survive this survival period. Almost all insurers have a 30-day survival period as their norm.
How Critical Illness Insurance Differs from Other Types of Insurance?
If you experience a medical emergency that needs hospitalization, your health insurance policy will protect you by paying for the necessary medical care. A critical illness insurance policy, on the other hand, will provide you with financial assistance in the form of a lump sum payout if you are diagnosed with a critical illness.
Which Illnesses Are Covered by Critical Illness Insurance in Canada?
Even though it is not required, critical illness insurance can be useful for anyone who wants to shield themselves and their loved ones from the potential financial effects of a serious illness. Approximately 1 in 2 Canadians will develop cancer during their lifetime, and approximately 1 in 4 will pass away from it, according to Statistics Canada.
In addition, approximately 1.6 million Canadians are dealing with heart disease or the aftereffects of a stroke. These are merely a few illustrations of the severe illnesses that can strike Canadians. Other typical critical illnesses include:
- Alzheimer’s illness
- A variety of sclerosis
- Parkinson’s illness
- Organ failure of major magnitude
- Paralysis
- Blindness
- Deafness
Age affects the likelihood of developing a critical illness, but it can also strike younger people. In Canada, about 10% of new cancer cases are discovered in patients under the age of 50. You may be more likely to develop a critical illness if you smoke, are obese, have high blood pressure, have high cholesterol, have a family history of critical illnesses, or if you have other risk factors like these.
As a result, it’s crucial to consider your unique circumstances and determine your likelihood of contracting a serious illness. Consider the impact a critical illness diagnosis would have on your income, savings, debts, and way of life.
Critical illness insurance might be a good choice for you if you do not have enough savings or other sources of income to cover the additional costs of a critical illness, or if you prefer not to use your savings or borrow money to do so.
What Expenses Can Be Covered by Critical Illness Insurance?
Some employers offer critical illness insurance as added benefit. You can also buy critical illness insurance on your own or through your employer. It can also be added as a rider to your existing life insurance policy, which might be a more cost-effective choice with the same benefit.
Because they understand that employees are concerned about high out-of-pocket costs with a high-deductible health plan, businesses have been eager to add these plans. Workers typically pay the full cost of critical illness plans, unlike other healthcare benefits. It, therefore, helps both businesses and employees save money. The fact that the money from critical illness insurance can be used for a variety of things is a major selling point, including:
- Covering expensive medical services that might not otherwise be available.
- Covering medical expenses that aren’t covered by a standard insurance plan.
- Covering daily living expenses so that the seriously ill person can concentrate their time and energy on getting better rather than working to pay their bills.
- Covering transportation costs, such as getting to and from treatment facilities, adapting vehicles to carry scooters or wheelchairs, and installing lifts in homes for critically ill patients who can no longer climb stairs.
- Patients who are nearing the end of their lives or who just need a quiet place to recover can use the money to go on a trip with their loved ones.
Even though having a critical illness insurance policy through work is great, having personal critical illness insurance is much better since you have control over your policy. If you change work you will lose your critical illness insurance benefits and purchasing a policy might be highly costly or impossible due to health conditions.
How to Find the Best Coverage for Your Needs?
When selecting a critical illness insurance policy, there are many things to consider. For example, limitations and exclusions that your policy may have which will be highlighted. On the other hand, if you are identified as having a covered critical illness, you will receive a lump-sum benefit in the amount of coverage indicated.
Depending on the insurer and the product, the coverage amount can range from $25,000 to $3 million. You ought to make a decision based on your financial needs and objectives. Other factors that determine the best option include the following items.
The Number of Illnesses that Are Covered
The number of illnesses that are covered is a list of the critical illnesses that are covered by your policy. Depending on the insurer and the product, the number of illnesses covered can range from 3 to over 30. You should select a policy that covers the most prevalent and serious critical illnesses that could affect you. Your family health history can be a great reference of which illnesses you need to be cover for.
The Waiting Period
The waiting period is the amount of time after receiving a diagnosis of a covered critical illness that you must live through to be eligible for the benefit. Depending on the insurance company and the product, the waiting period can range from 0 to 30 days. To receive the benefit more quickly, you should pick a policy with a shorter waiting period.
The Premium
The premium is the amount you must consistently pay (typically monthly or yearly) to maintain the status of your policy is known as the premium. It can change based on several variables, including your age, gender, occupation, health status, smoking status, and lifestyle habits. You ought to pick a policy with affordable premiums that fit your budget.
Is Critical Illness Insurance Worth It in Canada?
More than 80% of Canadians who are employed have either experienced a critical illness themselves or are aware of someone else who is experiencing one. More than what a typical group policy would pay for is needed to cover the full range of health expenses for treating medical conditions and providing care after a serious illness.
A family’s income may be impacted for many Canadians if they take such a long break from work. When recovering from a serious illness, individuals frequently need to stop working entirely for a while. These are the scenarios where having critical illness insurance is beneficial.
Also read: How important is it to have critical illness insurance? Honest review
What Benefits Can You Expect from Critical Illness Insurance?
When you are diagnosed with a condition covered by your critical illness insurance, you will receive a lump sum of money. The payout can be used for anything you need, including non-medical expenses like mortgage payments, travel, or equipment, as well as a vacation while you’re recovering. Compared to the costs of a typical health insurance policy, the premiums are low and reasonable.
Simply put, developing a serious illness can be very expensive. If you have a condition that is covered by your policy, critical illness insurance can assist you in covering any related costs. Some advantages of critical illness insurance include:
- Helps cover costs that your provincial or territorial health plan does not cover.
- Helps you and your family deal with a critical illness by providing a lump sum of money.
- Helps you feel less financial pressure so that you can concentrate on getting better.
You can focus on your recovery and lessen your financial strain with the aid of critical illness insurance. You may have more freedom and options in how you manage your lifestyle and health as a result.
Even with excellent health insurance, just one serious illness can put a significant financial strain on an individual. If you experience any of the medical emergencies listed below, your critical illness insurance will pay out:
- A heart attack
- Stroke
- Transplanting organs
- Cancer
- Cardiac bypass
The costs of these illnesses can quickly exceed a family’s health insurance plan because they need extensive medical care and treatment. You’ll struggle even more to pay those bills out of pocket if you don’t have an emergency fund or health savings account.
How Does Critical Illness Insurance Work in Canada?
When a life-threatening illness is discovered, critical illness insurance typically makes a one-time lump-sum payment. The one-time payment could help with costs like daycare or remodeling your home to make it more accessible. Cancer is one example of a critical illness.
If you are given a diagnosis of a life-threatening illness, critical illness insurance typically pays a one-time lump-sum payment. The one-time payment could help with costs like daycare or remodeling your home to make it more accessible.
The level of coverage you select will determine how much you receive as a benefit. Following the diagnosis of a condition covered by your policy, the insurance company typically pays you the benefit. The following are some ways that insurance companies can vary:
- The way they classify critical illness.
- How they are defined
Is Critical Illness Insurance Necessary for Children?
If you believe you won’t be able to cover all the costs that could result from your child being diagnosed with a covered critical illness, you might need critical illness insurance for children. To take care of your child, for instance, you might need to take time off work, which would mean losing money. In these situations, if your child were to contract one of the illnesses covered by the policy, a critical illness insurance plan for a child would provide you with a lump sum of money.
How Much Does Critical Illness Insurance Cost?
Critical illness insurance policies generally have low costs, especially when obtained through an employer, which contributes to their appeal. However, policies offered through employers have less flexibility, and coverage will be gone once stop working for that employer.
The more illnesses your plan covers, the higher the premiums you’ll have to pay. For $25,000 in coverage, a 45-year-old female may pay $40 per month for an individual, cancer-only plan. If the woman increased the coverage to cover coronary illnesses, organ transplants, and certain other conditions, she might have to pay twice that amount each month.
Critical illness insurance policies have some restrictions, just like all insurance policies. They not only cover the conditions noted in the policy, but they also only do so under the specific conditions noted in the policy. A cancer diagnosis, for instance, might not be sufficient to start the policy’s payment process if the disease has not progressed past the point of discovery or is not life-threatening.
Until the neurological damage lasts longer than 30 days after a stroke diagnosis, no payment will be made. One or more additional condition might be that the policyholder must be sick or survive after being diagnosed for a certain amount of time, which usually is 30 days.
Further Points to Consider
Seniors in particular need to exercise caution when it comes to these critical illness insurance policies. Policies might have payout restrictions that prevent people over a certain age (like 75) from receiving benefits, or they might have what is known as “age reduction schedules” that reduces your potential insurance payout as you age.
How Does Critical Illness Insurance Differ from Disability Insurance?
The cost of health-related expenses like private nursing care, physical therapy, medical equipment, or childcare may not be covered in full by your disability insurance. As a result, it would be ideal if you had both. Additionally, many disability plans offer a smaller monthly benefit, and many are only valid for a short time until you recover and can work again. To sum up, disability is based on income and even though it covers both injury and illness, it is a very different product and serves a completely different purpose.
If the Current Premium Is Low, Will It Eventually Go Up?
A person’s risk of developing life-threatening cancer, having a heart attack, or having a stroke rises with age. If you pick a term 10 critical illness insurance policy which means you will have coverage with a fixed monthly premium. Your premiums will therefore rise every 10 years.
How Is Critical Illness Insurance Paid Out?
Please note that if you have any pre-existing conditions, you might not be eligible to obtain a critical illness insurance policy. For more in-depth information, speak with an advisor.
Let’s assume you are diagnosed with a condition covered by your insurance, and you make it through the waiting period. In these situations, after your claim is approved, you will get a lump sum payment.
This money is then yours to use however you please and for whatever purpose. This can, for instance, pay for out-of-pocket costs such as certain prescription drugs, a mortgage or rent, short- or long-term care, etc. that might not be covered by your territorial or provincial health insurance.
Do Pre-Existing Conditions Get Covered by Critical Illness Insurance?
Any condition you had before the start of your policy’s effective period qualifies as a pre-existing condition and you may not even get approve for a policy. Any condition that called for medical attention and treatment falls under this category. Before the start of your policy, the lookback period for a pre-existing condition can last anywhere between a few months and a year. Pre-existing conditions are not covered. However, in some circumstances, the insurance company might be able to remove your pre-existing condition from your critical illness policy.
Do You Have to Take a Medical Exam for Critical Illness Insurance?
Most of the time, before issuing you with a critical illness insurance policy, insurance companies that offer such coverage demand that you undergo medical exams. Therefore, a medical examination is crucial when purchasing critical illness insurance.
Major Critical Illness Insurance Companies in Canada
Choosing a good critical illness insurance company requires factoring in numerous parameters. We hand-picked some of the best critical illness insurance companies in Canada which you will see in the following.
BMO Insurance Company
Due to the extensive list of conditions covered and generous coverage amounts offered, BMO provides one of the most comprehensive critical illness plans for the money. As one of Canada’s largest financial institutions, BMO can use its size and economies of scale to provide customers with comprehensive, scalable critical illness coverage at the most competitive rates through its Living Benefit family of products.
The Living Benefit critical illness insurance plan is offered by BMO. It offers Enhanced Coverage, which includes coverage for 25 serious medical conditions. Critical illness insurance from BMO has a $2 million cap on its maximum coverage.
The Living Benefit critical illness product from BMO provides coverage for loss of independence. Additionally, it provides partial payouts for seven different conditions, paying up to 15% of the policy’s coverage, up to a maximum of $50,000. The 30-day survival period is the amount of time you must endure the illness to be eligible for benefits.
BMO provides critical illness insurance with terms of 10, 20, or cover up to age 75 or 100. On a few BMO critical illness insurance plans, a 15-pay option is offered. For some of their term lengths, BMO offers the return of premiums upon death as well as upon early cancellation or expiration.
Canada Life Insurance Company
Canada Life offers the coverage you require for the most expensive critical illness insurance package but at a price. The company’s plans have something for everyone, even if you don’t want to cut any corners.
With Canada Life’s LifeAdvance, you can get the majority of the coverage terms, riders, child policies, and other extras that come with a critical illness insurance policy – but at a cost, of course. It is the Uber Black of its field. LifeAdvance is the brand name of the critical illness insurance offered by Canada Life. It offers Enhanced Coverage, which provides protection against 25 illnesses as well as an optionally addable condition.
The most that Canada Life will pay out under its critical illness insurance is $3 million. There is an additional option to add one more critical illness, and it covers 25. Loss of independence is covered as an add-on benefit in Canada Life’s LifeAdvance critical illness product. Additionally, the product provides partial payouts under eight different circumstances. Typically, the payout is up to $50,000 and is equal to 15% of the policy’s coverage.
The majority of illnesses have a 30-day survival period, during which you must continue to be ill to receive benefits. Canada Life provides critical illness insurance with 10- and 20-year terms, coverage up to age 75, permanent options with 15 or 20 Pay, or 100 Pay.
Additionally, they provide a few limited payment options, such as pay in 15 years or pay up to age 65, for their LifeAdvance family of critical illness products. For some of their term lengths, Canada Life offers the return of premiums on death and the return of premiums on early cancellation or expiration.
Empire Life Insurance Company
Empire Life is a market leader in critical illness insurance, offering protection for 25 conditions, six partial payout conditions, and coverage amounts of up to $2,000,000. With term options of 10, 20, and up to 75 years old, coverage options are classified as basic (4 conditions covered) or enhanced (25 conditions covered).
The critical illness insurance policies offered by Empire Life are called CI Protect (basic coverage for four of the most common critical illnesses) and CI Protect Plus (enhanced coverage for 25 life-threatening conditions).
For critical illness insurance, Empire Life offers a $2 million maximum. Loss of independence is one of the conditions that are covered. Empire Life’s CI Protect Plus product offers partial payouts for six distinct conditions, and each condition can be claimed twice without affecting the overall payout. Typically, up to a maximum of $50,000, the payout is 15% of the policy.
The 30-day survival period is the minimum amount of time you must endure the illness before you can receive benefits. Empire Life provides critical illness insurance with terms of 10, 20, or cover up to 75 or 100 years of age. Their Term to 100 policy (15 Pay) has a limited-pay option. When a policy expires or is canceled, Empire Life offers a return of premiums. It also offers a return of premiums upon death.
Equitable Life Insurance Company
For families with dependents, Equitable Life Insurance of Canada provides excellent, all-inclusive critical illness coverage with generous partial payouts for 8 additional conditions and maximum benefits of $2,000,000 for 26 conditions. Their critical illness insurance policies have a 10-year term, a maximum age of 75 or 100, and either limited or life coverage.
The Equiliving critical illness insurance line from Equitable Life offers coverage for 26 different diseases and conditions. The $2 million maximum coverage for critical illness insurance is offered by Equitable Life.
They provide additional coverage for five childhood illnesses and loss of independence, in addition to providing coverage for the 26 illnesses and conditions mentioned previously. For 8 different conditions, Equitable Life offers partial payouts; the payout is typically 15% of the policy up to $50,000. Partial payments, however, can only be claimed once.
Except for conditions that are not cardiovascularly covered, the survival period (the amount of time you must endure the illness before you can receive your benefit) is 30 days. With a 10-year term, coverage up to 75 or 100 years of age, and a choice of either life pay or a 20-year limited pay option (20-Pay), Equitable Life offers critical illness insurance. When a policy expires or is canceled after 15 years of coverage, Equitable Life does offer a return of premiums paid. They also offer a return of premiums paid upon death.
Foresters Insurance Company
There are two levels of critical illness insurance offered by Foresters: basic (covering four conditions) and enhanced (covering 25 conditions). They provide options for the return of premium payments, child coverage, partial payments for 8 conditions, and coverage up to $2 million. In addition to the typical 10 and 20-year terms, Foresters also provides term 80 policies to compete with term 100 policies.
There are two critical illness insurance plans available from Foresters. As opposed to Live Well, which offers only minimal coverage (4 conditions), Live Well Plus offers enhanced coverage (covering 25 conditions).
The maximum critical illness insurance coverage available to Foresters is $2 million. They protect against the loss of an independent existence. For eight different conditions, they provide partial payouts that can be used twice. Partial payments may be requested once during the coverage period, but this lowers the final benefit. Typically, up to $50,000, 15% of the policy is paid out.
The 30-day Foresters Survival Period applies to how long you must endure the illness before you can receive benefits. For a 10- or 20-year term, Foresters offers critical illness insurance, with coverage available up to age 80. Also, there are no options for limited payment.
RBC Insurance Company
For customers seeking long-term flexibility and thorough coverage, RBC offers premium critical illness insurance. Although there are no child riders, the coverage has up to 25 conditions for a full $2 million payout and 7 conditions for a partial payout. Policyholders may use their insurance as a source of long-term care payments as they get older.
It is known as the Critical Illness Recovery Plan and is offered by RBC. They provide expanded (25 conditions) coverage. For critical illness insurance, RBC offers a $2 million maximum policy. They also include a rider that provides coverage for the loss of independence. For seven different conditions, they provide prorated payouts. Only once during the policy’s lifetime will a payout of 10% of the policy’s value, up to $50,000, be made.
Children’s illnesses are not covered by RBC. The 30-day survival period is the minimum amount of time you must endure the illness before you can receive benefits. RBC provides 10-year critical illness insurance policies with coverage options for ages 65 and 75. There are no options with restricted payment. RBC provides a return of premiums upon death, but not upon expiration or cancellation of the policy.
Humania Insurance Company
The most complete critical illness insurance provider is Humania Assurance, which provides coverage for up to 37 conditions, including several that are only present in children. With their product line, you can select basic (4 conditions) or enhanced (25 conditions) coverage up to $1 million, with options for Child Rider (7 additional conditions) and partial payouts for 3 conditions.
Critical illness insurance is provided by Humania. The policy is available with basic (4 conditions) or enhanced (25 conditions) coverage and is appropriately titled Term Critical Illness. The most that Humania will pay out under its critical illness insurance policy is $1 million. They provide insurance for the loss of one’s existence. For three different conditions, they provide partial payouts. Partial payments may be requested four times during the coverage period, and the payout is typically 10% of the policy up to $10,000.
The 30-day Humania survival period (during which you must continue to be sick to receive benefits) applies. Critical illness insurance is available from Humania for terms of 10, 15, 20, 25, and 30 years, with coverage available for those up to 75 years old.
Only for permanent coverage are limited-pay options available. Humania provides a premium refund upon death, as well as a premium refund upon expiration or cancellation of the policy following the policy’s 15th year or upon the policyholder’s turning 65.
AplusWealth: Your Gateway to the Best Critical Illness Insurance in Canada
When traditional insurance is insufficient, critical illness insurance may step in. If you believe that you wouldn’t be able to cover all the costs that could result from being diagnosed with a covered critical illness, such as some medical bills and living expenses, you might need critical illness insurance. If you need to take time off work to recover, it may also help to protect you from income loss.
AplusWealth is the leading insurance company in Canada with the motto “providing proper insurance solutions to Canadians.” At AplusWealth, we place a strong emphasis on educating our clients about all facets of their finances, ensuring that they have the knowledge and resources necessary to make the best choices, and continuously monitoring it to meet their objectives. To buy your critical illness insurance plan from AplusWealth, contact us today.
If you are hesitant to contact a live agent, we will get you covered. AplusWealth inc., has developed an intelligent insurance app to provide instant quote, virtual unbiased insurance advice, policy, and insurance company comparison, so Canadians can make smart choices and protect themselves and their loved ones the right way. GetCovered is the name of this powerful platform that is shaping the way Canadians obtaining critical illness insurance.