What is Critical Illness Insurance in Canada?

A critical illness is a kind of serious and possibly life-threatening medical condition or illness, typically heart attack, cancer, kidney failure, or stroke. A critical illness has the potential to astronomically impact the quality of a person’s life, including their ability to work and consequently their financial stability. The unfortunate reality is that a critical illness could impact anyone, regardless of their age, gender, or current health status. Although your odds of developing a critical illness are greater with age, life does happen – and when it does, it may require extremely expensive medical treatments and ongoing care to maintain your current standard of living.

When life happens, it’s better to be safe than sorry. A critical illness diagnosis may very well turn your course of life upside-down, and it’s crucial to have – at the very least – some means of access to coverage In this article, we will go over what critical illness insurance is, what its importance is, what it may cover, and what it can cost.

Defining critical illness insurance

Critical illness insurance is a policy that is designed to kick in upon a covered medical illness diagnosis and provides a lump-sum payment which you have the flexibility of choice when it comes to determine what you want paid off. For many people, that means paying off debts, covering medical expenses (for costs that may not be covered by traditional provincial health plans), replacing lost income, and even funding any necessary lifestyle changes (renovations to your home, hiring a caretaker, etc.)

What is the importance of critical illness insurance?

Sufficient insurance allows you to focus on your recovery and have the money you require to help you out with any ongoing or even unexpected expenses if you happen to be diagnosed with a serious illness. The importance of having critical illness insurance lies in the peace of mind you get – since, with a critical illness diagnosis, you’re probably buried under all that stress about the “what ifs” and the unfortunate but necessary life changes. Critical illness insurance may also supplement existing health insurance plans, like life insurance or disability insurance.

What types of critical illness insurance are there?

In Canada, there are three main types of critical illness insurance policies. There are standalone policies, rider policies, and group critical illness policies. We’ll detail each in the section beneath:

Standalone critical illness policies

Standalone critical illness policies are typically purchased separately from any existing life policies or disability policies you may own. These are specifically designed to insure critical illness diagnosis, and will offer a lump-sum payment upon the diagnosis of a condition that is covered. These policies may be more flexible and have different benefit amounts or coverage options, but they can be expensive.

Rider critical illness policies

A rider policy may be added on to an existing life insurance policy, which means they offer coverage for critical illness diagnosis in addition to an existing death benefit from a life insurance policy. They have limitations as to what they cover and the selected benefit amounts, but they are more affordable than standalone critical illness insurance policies.

Group critical illness policies

Group critical illness policies are generally offered as a part of an employee benefits package, or even through group memberships/associations. They can offer affordable coverage to individuals who may not qualify for rider critical plans or standalone critical illness insurance plans.

Which type you need is highly dependent on your own needs, budget, and circumstances. We advise working with an Excalibur Defender to help you choose the best option.

Critical illness coverage and benefits

Each critical illness policy will vary in the kinds of conditions and illnesses it can cover, in addition to the types of payment options and benefit amounts.

Covered illnesses/conditions for critical illness

The kinds of conditions and specific illnesses that a critical illness insurance policy may cover depends largely on the terms of the policy and the insurer that you’re with. You will find that most policies will cover an array of common life-threatening conditions and illnesses, such as heart attacks, strokes, organ failure, cancer, and neurological disorders. Certain policies may also cover blindness, paralysis, and Alzheimer’s disease. Be sure to review what conditions are covered to ensure it fits with what conditions/health risks are of the biggest concern to you.

Payment options

Most policies are designed to provide a single, lump-sum payment upon a critical illness diagnosis, which can be used however you want. Other policies will offer partial/staggered payments, depending on how severe the diagnosis is or what kind of treatment is required. Check your policy’s payment options to understand how payment is delivered and if it aligns with your financial needs.

The cost of critical illness and factors to consider

Before you go ahead and purchase a critical illness insurance policy, it’s important to note how costs are determined and the factors you’ll want to consider before choosing coverage. Keep in mind that costs for critical illness insurance policies are based on:

• Age and health. The younger you are and the cleaner your health bill currently is, the less you may end up paying for your insurance. Sometimes, certain health conditions may make it difficult to get insured altogether.
• Family medical history. Your family’s medical history may raise or lower your odds of developing a critical illness, so it’s vital to consider any pre-existing hereditary conditions that may impact your coverage needs.
• Lifestyle and occupation. Some occupations/lifestyles are riskier than others. For instance, being a chemist might expose you to hazardous materials long-term. Consider your risk tolerance when choosing a policy.
• Coverage needs. Look at what you would want covered in the event of developing a critical illness. Would you need to cover lost income? Medical expenses? Financial obligations, goals? What is your existing insurance like? The more coverage you need, the more your insurance will end up costing you.

Budget and affordability is a big factor to be considered when purchasing critical illness insurance. It can be expensive if you don’t look at your own budget tolerance and weigh different options when purchasing beforehand.

An Excalibur Defender will be happy to help find you the best critical illness insurance options for your need, budget, and coverage desires. They can help you shop around and navigate your various options.