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Critical Illness Insurance
Enables you to focus on your recovery if you're diagnosed with a critical illness - such as a heart attack, stroke, or cancer.
What is critical illness insurance?
Critical illness insurance is designed to provide financial support in the form of a one-time, tax-free cash benefit if you are diagnosed with a critical illness. This lump sum payment offers you the flexibility to use the funds as you see fit, whether for medical expenses, daily living costs, or other financial obligations.
This type of insurance typically covers a range of serious health conditions. The most commonly included are life-threatening illnesses such as cancer, strokes, and heart attacks. Most policies cover these fundamental conditions, and many extend coverage to over 20 additional critical illnesses, reflecting the diverse health challenges that individuals may face.
In the past, a diagnosis of a critical illness often led to a grim prognosis. However, advancements in medical science have significantly increased survival rates. This progress is a beacon of hope for those diagnosed, indicating a shift towards better outcomes and longer life expectancy.
While the increase in survival rates is undoubtedly a positive development, it introduces a new challenge: financial resilience during and after the illness. Surviving a critical illness often brings with it substantial financial burdens, including medical bills, loss of income, and the need for ongoing care. Critical illness insurance aims to alleviate these financial pressures, providing a safety net that allows individuals and their families to focus on recovery and rehabilitation without the added stress of financial instability.
Tax-free Lump Sum
Get a one-time, tax-free cash payout to use freely for any purpose.
Expert Second Opinions
Some plans offer access consultations with top medical experts for accurate diagnoses.
Recovery Support
Some plans offer counselling and other services from professionals during your recovery.
Broad Illness Coverage
Stay protected against a wide range of critical illnesses, including cancer, heart attacks, strokes, and more.
How does critical illness insurance work?
Selecting Your Coverage: Begin by working with an advisor to determine the amount of coverage you need, which will dictate the level of financial support you'll receive in case of critical illness.
Premium Payments: Regular premium payments are required to maintain your coverage. These premiums vary based on your chosen coverage amount, age, and other factors.
Filing a Claim: In the event that you are diagnosed with a covered critical illness, you will need to file a claim with your insurance provider.
- Lump-Sum Benefit: Upon claim approval, you will receive a one-time, tax-free cash payout.
- Utilization of Benefits: The cash benefit you receive can be used at your discretion, aiding in financial stability and recovery efforts. This flexibility allows you to allocate funds where they are most needed, whether for medical expenses, daily living costs, or other financial obligations.
Why should you have critical illness insurance?
The chances of a critical illness occurring are greater than all other causes combined (i.e. dying before a certain age, or developing a long-term disability). Being diagnosed with a critical illness can be financially draining, and may hinder your long term financial security.
It's common
One in three Canadians is diagnosed with a life altering critical illness.
Cover medical costs
Use your payout to help with your medical expenses while you recover.
Protect your savings
Your retirement savings are earmarked for retirement, not medical bills.
Focus on recovery
Recover easier knowing you're financially secure and have cash to pay for proper care.
Get help with your critical illness insurance planning.
Speak with a professional advisor who can help.
How much does critical illness insurance cost?
There are a number of factors that can affect plan pricing, including:
Age
Generally, insurance cost less for younger age groups, and more for older age groups
Gender
Men generally face a higher risk of critical illnesses than women.
Coverage amount
Larger coverage amounts cost more than lower coverage amounts.
Health history
Insurance cost can be affected by health history.
How much critical illness coverage do you need?
The right amount of coverage depends on your individual circumstances, balancing meaningful protection with affordable premiums. Consider these key factors:
Income Impact: Estimate the potential loss of income if you're unable to work due to illness.
Spousal Income Consideration: Assess how your family's finances would be affected if your spouse or partner needs to take time off for caregiving.
Ongoing Expenses: Plan for covering regular financial commitments like mortgage or rent, loans, groceries, and utilities.
- Additional Costs: Factor in potential extra expenses such as healthcare treatments, travel for medical appointments, childcare, or home care assistance.
Consulting with a professional advisor can help you accurately determine your insurance needs, ensuring you have adequate coverage tailored to your life situation.
Get in touch
Talk to an advisor who can understand your situation, answer your questions and help you build an insurance plan appropriate for you and your family.
Frequently asked questions
Answers to key questions about Critical Illness Insurance
Critical Illness Insurance and Disability Insurance are designed to address different types of financial risk.
Critical Illness Insurance typically pays a one-time lump sum if you are diagnosed with a covered condition and meet the policy’s requirements. The funds can generally be used for any purpose, such as covering medical expenses, reducing debt, or taking time away from work.
Disability Insurance is designed to replace a portion of your income if an injury or illness prevents you from working. Benefits are usually paid monthly after a waiting period and continue only while you remain unable to work, subject to the terms of the policy.
Because they address different risks, these two types of insurance are often used together rather than as substitutes.
Some Critical Illness Insurance policies offer optional features that may return a portion or all of the premiums paid, provided certain conditions are met.
These features are not included in all policies, may increase the cost of coverage, and are subject to specific rules set by the insurer. Availability and terms vary by policy and insurer, so it’s important to review the details carefully before relying on this feature.
In many cases, benefits paid from individually owned Critical Illness Insurance policies are received on a tax-free basis under current Canadian tax rules.
However, tax treatment can vary depending on how the policy is structured, who owns it, and who pays the premiums. Tax rules may also change over time. For clarity in your specific situation, professional tax advice is recommended.
Requirements vary by insurer and policy.
Some applications involve answering health-related questions, while others may require additional medical information. The level of medical review can depend on factors such as age, the type of policy, and the amount of coverage requested.
In certain cases, simplified or guaranteed-issue options may be available, though these typically come with limitations compared to fully underwritten policies.
Life insurance is designed to pay a benefit to your beneficiaries if you pass away, helping provide financial support to those you leave behind.
Critical Illness Insurance, by contrast, is designed to provide financial support while you are living, following the diagnosis of a covered condition and subject to the policy terms. The benefit is paid directly to you and can be used at your discretion.
Both types of insurance serve different planning purposes and may play complementary roles in an overall insurance strategy.
Still have questions?
Please contact our office and we'll be happy to address any questions you may have.
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