Have You Discovered Critical Illness Insurance Protection
Brad Ward 06 Dec 2017
Words like cancer, heart attack, and stroke are scary in themselves – but often these critical illnesses are costly. Time missed from work, home renovations and other costs add up. Did you know that there is a way you can recover from a critical illness like cancer without having to worry about paying your bills? It is by owning critical illness insurance. In Canada, we have the opportunity to put this kind of protection in place before an unexpected illness happens to us. You can also provide this type of protection for your children.
The history of critical illness insurance?
You might ask how critical illness insurance coverage started. In 1983 Critical Illness Insurance was created by Dr. Marius Barnard in South Africa. He started the first critical illness product and called it ‘Dread Disease Insurance.' His reason for creating this type of insurance came from his desire to see his patients recover without added financial stress after they had heart or cancer surgery. He found that the stress of them having to go back to work prematurely to earn a paycheque made them worse, and some even died. When the first Dread Disease Insurance was introduced it covered only a few illnesses. In 1983, four conditions were covered by the policy: heart attack, cancer, stroke and coronary artery bypass surgery. (1) Today some critical illness policies cover many other illnesses like blindness, Alzheimer's disease, and coma.
What is critical illness insurance?
Critical illness insurance is a living benefit that provides you with a tax-free lump sum of money that you can use to pay for expenses after you’ve been diagnosed with an illness. The money is paid out to you in the form of a cheque once you are diagnosed with a critical illness, and you complete a 30-day survival period. Critical illness insurance covers major illnesses like heart attack, stroke and life-threatening cancer.
Some critical illness policies also cover the following conditions:
• Acquired brain injury
• Aortic surgery
• Aplastic anemia
• Bacterial meningitis
• Benign brain tumor
• Coronary artery bypass surgery
• Dementia, including Alzheimer’s disease
• Heart valve replacement
• Kidney failure
• Loss of independent existence
• Loss of limbs
• Loss of speech
• Major organ failure on waiting list
• Motor neuron disease
• Multiple sclerosis
• Occupational HIV infection
• Parkinson’s disease
• Severe burns
Some child related conditions special to children that could be covered are:
• Cerebral palsy
• Congenital heart disease
• Cystic fibrosis
• Muscular Dystrophy
• Type 1 Diabetes Mellitus
What types of critical illness insurance are there?
There are essentially two types of critical illness policies you could apply for – one that requires a medical underwriting and one that does not require a medical underwriting. If you are underwritten for a policy, you can apply for a greater amount of coverage. Non-medical coverage limits are typically lower than medical coverages and higher premiums. Some companies offer a return on premium, so if you do not need the coverage by a certain age, you can get the money you paid into the policy returned to you.
What would you do with a critical illness payout?
Once you receive the money from a critical insurance claim, you can use it as you wish. For some, it could be the difference between recovering quickly and having a longer recovery period or going back to work immediately. Having extra money can give you more flexibility and prevents you from digging into your hard-earned savings like RRSPs. The funds you receive could be used for:
• Supplementing lost wages because you are unable to work (for you or your spouse or both)
• Help you pay your bills (mortgage, food and auto expenses)
• Be able to get out-of-country medical services
• Pay for medical procedures and prescriptions not covered by health care.
• Help your children with their daily activities and pay childcare
• Help cover the costs of operating your business
• Remodel your home for a wheelchair
• Or whatever you would like to do with it
The good news and the bad news
There is some good news when it comes to critical illnesses – due to our improving medical system in Canada more and more individuals are recovering from their illnesses. In Canada, 63 percent of people diagnosed with cancer will survive (2), while almost 77 percent of those who survive a heart attack and about 72 percent survive a stroke. (3)
The not so good news is that although more people are surviving illnesses the number of illnesses diagnosed is increasing. Over a lifetime, one in 2.2 men and one in 2.5 women will develop cancer. (2) Every year there are 70,000 heart attacks in Canada and more than 50,000 strokes. (3) A lot of times an illness will strike when someone least expects it and it adds an extra strain on their finances. Sometimes the financial burden is so strong that it causes them to be forced into bankruptcy. A lot of people have to dig into their RRSPs or remortgage their home to pay the extra bills associated with an illness like a stroke.
Do you know someone who had a critical illness? How did it affect them financially?
Instead of risking the financial strain of paying the bills yourself after a critical illness, why not put that burden on an insurance company. Depending on your age the premiums may be minimal. Some insurance companies even offer a Return on Premium riders so if you do not use the coverage, your premiums are refunded – like a forced savings plan.
How much critical illness insurance can I get?
The amount of coverage you should apply for depends on how much you may require recovering from a critical illness – it depends on your lifestyle. Coverages can range from as low as $10,000 to $2,500,000. Some insurance companies may even offer higher coverages.
I am interested in applying for my coverage – what's next?
When you do decide to apply for a critical illness policy, then contact us at MyLifePolicy.ca. We will do a needs analysis with you to determine the best critical illness coverage for your situation. We work with a number of insurance companies and can help you keep the coverage within any budget.
(2) Source Canadian Cancer Society’s Advisory Committee on Cancer Statistics 2014, Toronto, ON: Canadian Cancer Society, 2014.
(3) Source: Heart and Stroke Foundation – "Getting to the Heart of the Matter" – 2015 report on the health of Canadians