Critical illness insurance
A lump sum if you’re diagnosed with a covered serious illness, such as cancer, a heart attack or a stroke.
- One lump sum
- paid after a covered diagnosis
- Yours to spend
- no receipts, no restrictions
- Pays on diagnosis
- whether or not you keep working
How a critical illness benefit works
One cheque, many uses.
A critical illness policy pays one lump sum once you’re diagnosed with a covered condition and the survival period has passed. How you spend it is up to you. The benefit is generally tax-free when you own the policy personally.
The benefit isn’t tied to receipts or bills. Covered conditions, survival periods and amounts depend on the policy.
What’s covered
Up to 26 conditions.
Every policy lists and defines the conditions it covers. Most include cancer, heart attack and stroke, plus a longer list of other serious conditions.
Cancer
Life-threatening cancers, as the policy defines them
Heart attack
Damage to the heart muscle from a blocked artery
Stroke
A blocked or burst blood vessel in the brain, with lasting effects
And up to 23 more
Heart and circulation
- Aortic surgery
- Coronary angioplasty
- Coronary artery bypass surgery
- Heart valve replacement or repair
Brain and nervous system
- Benign brain tumour
- Bacterial meningitis
- Coma
- Dementia, including Alzheimer’s disease
- Motor neuron disease
- Multiple sclerosis
- Parkinson’s disease and specified atypical Parkinsonian disorders
- Paralysis
Organs and blood
- Kidney failure
- Major organ failure on a waiting list
- Major organ transplant
- Aplastic anemia
Senses and independence
- Blindness
- Deafness
- Loss of speech
- Loss of limbs
- Loss of independent existence
Other
- Severe burns
- Occupational HIV infection
Early benefits
Many policies pay an early benefit of 10 to 25% of your coverage, often up to $50,000, for less severe diagnoses such as some early-stage cancers. Your policy stays in force, though the early benefit may be deducted from a later full claim.
Based on the Canadian Life and Health Insurance Association’s 2018 benchmark definitions. The list and definitions vary by policy, and the definition in your policy is the one that applies.
The first 90 days
Why early symptoms matter.
Many policies exclude certain conditions if signs, symptoms or tests began within the first 90 days of coverage. It most often applies to cancer, and can also apply to benign brain tumour, multiple sclerosis and Parkinson’s disease.
- Day 1: Your coverage starts, inside the 90-day exclusion period
- Day 40: Symptoms begin and you see your doctor, inside the 90-day exclusion period
- Day 70: Your doctor orders tests, inside the 90-day exclusion period
- Day 90: the exclusion period ends. Day 150: Tests confirm cancer and you claim
In this example, the claim isn’t paid
The symptoms began inside the first 90 days, so the cancer is excluded, even though it was diagnosed later. Future cancer claims may also be excluded.
If symptoms start after day 90
The exclusion no longer applies, and the claim is assessed against the policy’s definitions as usual.
Why it matters
More people recover.
Survival rates for serious illnesses have improved a great deal. That’s good news, and it means more people need money to live on while they recover: for time off work, for a partner who steps away to help, and for costs a provincial plan doesn’t pay.
How much you need
An amount that makes a difference.
Most people add critical illness coverage after their life and disability coverage is in place, so the amount often comes down to what fits the budget. Aim for an amount that would make a real difference when you need it. More is better, as long as you can comfortably keep paying for it.
If you were diagnosed tomorrow, what amount would actually make a difference?
Critical illness or disability
Two kinds of living benefit.
| Feature | Critical illness | Disability |
|---|---|---|
| How it pays | One lump sum | A monthly income |
| What triggers it | Diagnosis of a covered condition | Being unable to work |
| If you keep working | It still pays | Usually no benefit |
| Tax on benefits | Generally tax-free when you own the policy personally | Generally tax-free when you pay the premiums personally, taxable when your employer pays |
Many people have both, because they pay for different things. Disability insurance
Your choices
The terms you choose.
A few choices decide how long your coverage lasts, what it costs and what else it can do. We’ll explain each one for your situation.
How long you’re covered
A term such as 10 or 20 years, to age 65 or 75, or for life. Shorter terms cost less at first and rise when they renew; longer coverage costs more but the premium stays level.
Return of premium
Get some or all of your premiums back if you don’t make a full claim: on death, if you cancel after a set number of years, or when the policy ends.
Waiver of premium
If you become disabled, the insurer pays your premiums for as long as you meet the policy’s definition of disability.
Coverage for children
A child plan or rider covers your children. Some child plans add childhood conditions such as cerebral palsy, cystic fibrosis and type 1 diabetes.
Long-term care conversion
Some policies let you convert coverage to long-term care insurance later in life.
On its own or with life insurance
Buy it as a separate policy, or add it to a life insurance policy as a rider.
Cost
What affects the price.
Age and sex
Rates rise with age, and insurers price men and women differently.
Smoking
Smokers pay considerably more.
Health and family history
Your own history, and sometimes your family’s, affects the price and what’s covered. If you can’t qualify, simplified issue plans ask fewer health questions, but usually cover fewer conditions or pay a lower maximum.
Coverage amount
The larger the lump sum, the higher the premium.
How long you’re covered
Coverage for life costs more than a shorter term.
Options you add
Return of premium and other options add to the cost.
Engineers, geoscientists, technicians and technologists: your association gives you access to Engineers Canada Critical Illness.
See the planFrequently asked questions
All questionsHow does critical illness insurance differ from disability insurance in Canada?
Critical illness insurance pays you one lump sum when you’re diagnosed with a covered condition, whether or not you keep working. Disability insurance pays a monthly income, after a waiting period, while illness or injury stops you working. They pay for different things, so many people have both.
Are critical illness insurance payouts taxable in Canada?
Generally, no. When you own the policy personally, the lump sum is generally received tax-free. It can be different when a business owns the policy or pays the premiums, so get tax advice for those arrangements.
Are medical questions or exams required to apply for critical illness insurance?
Usually, yes. You answer health questions, and for larger amounts or at older ages the insurer may also ask for a medical exam, blood tests or a report from your doctor. Your family history can also affect the price and what’s covered. If you can’t qualify, simplified issue plans ask fewer health questions, but usually cover fewer conditions or pay a lower maximum.
What is the difference between life insurance and critical illness insurance?
Life insurance pays the people you name when you die. Critical illness insurance pays you, while you’re alive: a lump sum once you’re diagnosed with a covered condition and the survival period, usually 30 days, has passed. You can buy critical illness insurance on its own, or add it to a life insurance policy as a rider.
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Related to critical illness insurance
- Life insurance Protects the financial security of the people who matter most.
- Health and dental insurance Coverage for health and dental costs your provincial plan doesn’t pay.
- Long-term care insurance Helps pay for care if you can no longer look after yourself.
- Disability insurance Replaces part of your income if illness or injury stops you working.
A question about your coverage? Ask us.
No obligation. We’ll tell you plainly what we think, including when you already have what you need.