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What is Critical Illness Insurance?

December 16, 2017

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We are all familiar with life insurance, where the beneficiary receives a sum of money when the life insured passes away, but not as many people are familiar with how critical illness insurance works.

Critical Illness Insurance 101

Critical illness insurance (CI) is a lump sum cash benefit that is paid to the insured when he or she is diagnosed with an illness named in the policy.

A typical CI policy covers “the big 3” – cancer, heart attack and stroke.  However, each carrier is a little different and some will cover as many as 30 conditions.

CI can be its own policy or a rider on a life insurance contract.

The benefit of a CI policy is a tax free lump sum that you may spend whichever way you wish.

Typical uses of this benefit are:

  • Pay for additional medical expenses
  • Pay for prescription drugs or experimental treatments not covered by a provincial plan
  • Replace income or the patient or family caregiver through recovery.
  • Hire a caregiver
  • Final expenses if the patient does not recover
  • Bucket list trip with friends and family.

You can use the lump sum of cash in the ways that matter most to you.

Many Canadians think they don’t need CI insurance because we have a wonderful healthcare system that covers many of our medical costs.

It’s true that we are fortunate to have very progressive healthcare, but the government does not cover lost time from work, the full cost of some medications and treatments, and the other many costs that turn your personal and financial world upside down when a critical illness strikes.

The benefit amounts vary. You can get anywhere from a $10,000 to $2,000,000 benefit.

What Are the Odds?

Han Solo may not like to hear about the odds, but unless you are a dashing hero in a popular space opera, you need to know about the things that can dramatically affect your life.

The probability that you will have a serious illness that affects your life for several months before you turn 65 is actually higher than the probability of your death.

Currently in Canada, one out of every two people that have a heart attack is under the age of 65. One out of three Canadians will develop a form of cancer. One in 20 will have a stroke before they turn 70. The odds are very high.

It is important to note, however, that the odds of surviving are high, too. Ninety-five per cent of heart attack victims under 65 survive the first attack; 65 per cent of cancer victims survive for at least five years; and 75 per cent of the aforementioned stroke sufferers survive.

Surviving is great! With CI, it’s even better because you can skip the financial recovery process and focus on your physical recovery. The last thing you need to worry about is how to pay the mortgage when you need to focus on chemotherapy or other intensive treatments.

Is Cancer Insurance the same as CI insurance?

Cancer insurance is indeed CI insurance, but it is important to note that it is just a branding term. It can be misleading since most CI policies cover cancer in addition to other conditions.

How to get Critical Illness Insurance

As with most insurance policies these days, you can go online and get insurance remotely, but when it comes to CI, we highly recommend speaking with a broker.

In order to have a smooth claims process, and to only be insured for your actual insurable risks, a broker will do a needs assessment and match you with the policy that best suits you. There are many different CI policies on the market, and they all have different coverage limits, covered illnesses, and fine print details.

This is not a policy that you want to misunderstand. Worse, you don’t want to get one that actually doesn’t cover your biggest risks. If MS is a risk factor for you, you need a policy that covers more than the “big three.”

Get in touch with a broker today to learn more about this important coverage protection. Life happens, but you can be as prepared as possible when it does.

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