Close this search box.

Is Critical Illness Insurance Worth It?

September 27, 2022

Quick Life Insurance Quote

Critical illness insurance covers you in case of a major health emergency, such as cancer, heart attack, or stroke. In Canada, many believe that they’re fully protected with healthcare and a regular health insurance plan, but there are many uncovered costs.

Because critical illnesses generate much larger medical costs than regular insurance covers, critical illness insurance helps by paying a lump sum to cover extra drug costs, home care, and other expenses due to your illness.

How Likely Are You To Be Diagnosed With a Critical Illness?

Approximately 80% of insurance claims in Canada are from stroke, cancer, heart attack, and kidney failure; illnesses commonly covered in most critical illness policies. Over 80% of working Canadians have had a critical illness or know someone with one.

In Canada, 2 out of 5 people are expected to develop cancer at some point, and 35,000 cardiac arrests and 62,000 strokes happen each year.

While not all illnesses are dire, continued medical care and necessary lifestyle changes create financial stress. Because of medical advances, the average life expectancy for people with these illnesses is much longer. While this is excellent, people need to be financially prepared for ongoing medical expenses after diagnosis for much longer.

As a result, it is likely that at some point, you may be impacted by a serious illness.

What Costs Do You Need to Be Prepared For?

Disability insurance partially covers loss of earnings, and regular health care and medical insurance policies cover some treatment and drugs, but there are other expenses you need to prepare for. When critically ill, people often find they reach their maximum coverage amounts quickly but still have large, unexpected expenses outstanding.

Deductibles and waiting periods of other forms of insurance mean there are still gaps to pay. If your disability insurance provider only pays a percentage of your income, you have increased medical expenses to deal with on less pay. You may need to be away from work longer than expected for a full recovery from one of these life-threatening illnesses.

Special care, including home care, and uncovered or partially-covered drugs are huge expenses. Depending on your situation, you may need to pay for increased childcare costs while you are ill. Transportation costs increase. Being unable to drive because of your illness, getting to medical centres, and retrofitting vehicles to carry scooters or wheelchairs are costs that you will have to pay out of pocket without additional coverage.

You may need modifications to your home. Cardiac arrest and stroke survivors often need to install ramps, handrails, lifts, and other mobility assists.

There may also be an experimental, alternative, or uncovered treatment available out-of-country that you want to try. Many can’t afford this without a critical illness policy payment to cover treatment costs, travel and accommodation.

How Does Critical Illness Insurance Help?

Critical illness insurance pays for costs not covered by traditional insurance, including non-medical costs. Once you provide evidence of the illness, a tax-free, lump sum is paid which you can use however you want, for full flexibility. Amounts vary by policy. In worst-case situations, it can be used for end-of-life expenses or a final trip with family. An approved benefit may be passed to your beneficiary.

What Does It Cost?

Costs range based on how much coverage you want and your age, sex, medical history and family history.

Coverage is limited to specific diseases and medical conditions, but the most common ones are covered by most insurance providers. Different policies cover different illnesses with varying exceptions, but most are inexpensive. Policies which cover a larger number of illnesses with fewer exceptions will be more expensive. Some policies have full coverage for over 25 illnesses, but many offer more limited coverage for four to 16 conditions, for more affordable insurance payments.

There’s a range of coverage amounts to meet your needs. Some critical illness plans will offer partial payouts for partial conditions.

Alternatives to Critical Illness Insurance

There are alternative coverage options to supplement critical illness insurance, or to be used instead of it. 

Disability insurance covers lost income when you’re unable to work regardless of the specific medical reason.

You can have a high-deductible, traditional health insurance plan, while maintaining a health savings account or flexible spending account to help cover deductible costs. These only cover medical costs and usually still do not cover sufficiently.

Maintaining an emergency fund of at least three to six months income is an option, but takes time to accumulate and is often not enough for extreme medical costs. They are also too easily ‘dipped into’.

No insurance is better; each is different to let you pick which meets your individual needs.

Who Should Buy Critical Illness Insurance?

Assess your budget. If you don’t have flexibility for large medical expenses and can’t cope with a wage loss, critical illness insurance may be worthwhile for you.

Single people, or young families with a mortgage, who can’t afford to not work and still meet all obligations, usually benefit from this insurance to avoid financial hardship. Older people, with full savings, a fixed income, and no dependents, who would probably have high premiums, may not benefit from critical illness policies.

Looking for Critical Illness Coverage?

Shelter Bay helps you assess your needs to find the right insurance products for you, with monthly payments to fit your budget. If you would like the protection and flexibility that critical illness insurance coverage can give, contact us today.

Request A Quote

Request A Quote

Request A Quote

Request A Quote