Critical Illness Insurance in Canada

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About Critical Illness Insurance in Canada

Critical illness insurance is not something you probably want to think about. But it’s something you want to have protection for should you become critically ill and are no longer able to work. Money is one of the last things you want to have to worry about if you are diagnosed with cancer or suffer a heart attack. This insurance will ensure your finances are taken care of so you can focus on your recovery.

Below you will learn about how critical illness coverage works, who needs it, and how it protects you.

What Is Critical Illness Insurance?

Critical illness insurance provides you with financial protection should you become critically ill. This insurance provides you with a tax-free lump sum payment when you are diagnosed with a critical illness. It helps to take care of costs related to your treatments, living expenses, mortgage, and more. You receive coverage outside the scope of your life insurance or disability insurance plans.

Knowing you have financial protection while you are ill can give you peace of mind and allow you to make your health a priority.

How Does Critical Illness Insurance Work?

health lab test results on computer to focused middle aged older patient

The process for how this insurance works is straightforward:

Plan: Select the plan and limits you want
Pay: Pay your premium (monthly or annually)
Claim: File a claim if you are diagnosed with a critical illness
Review: Your insurer will review medical documents and approve the claim
Payout: You will receive a lump sum benefit
Financial protection: You can use the money to cover costs related to bills, health care and equipment, mortgage, and more.

Keep in mind that not all policies are the same. Speak with your insurer to be clear on how your specific coverage works.

What Does Critical Illness Insurance Cover?

Your policy will cover you for a lengthy list of recognized medical issues. The list can vary based on your insurer. Here are the generally accepted conditions that are covered:

Cancer
Heart attack
Stroke
Artery by-pass or open-heart surgery
End-stage kidney failure
End-stage lung disease
End-stage liver failure
Coma
Major Burns
Major organ or bone marrow transplant
Multiple Sclerosis
Muscular Dystrophy
Parkinson’s Disease
Alzheimer’s Disease
Severe Dementia
Primary Pulmonary Hypertension
Benign Brain Tumour
Encephalitis
Blindness
Paralysis
Terminal Illness

There may be terms and conditions for what is paid out and what is not. For example, a minor heart attack may not qualify, but a major heart attack does. Speak with your insurer for clarification, terms, and conditions.

Other Support Services

Finances are only one of the many things you need to think about when diagnosed with an illness. You should also consider medical help and other forms of support to help you in your time of need. Critical illness policies provide you with these other types of support. Depending on your plan type, it can include :

Access to top medical specialists
Counselling
Family support services
Childcare
Legal consultations
Wellness advice

When Should I Buy Critical Illness Insurance?

There is never an inconvenient time to buy it. As you age, your premiums will increase. So, the sooner you buy a plan, the less you will pay in premiums.

How much will fees change over time?

Healthy individuals 40 and under can pay $10 or less per month. For those 50 and under it is about $25 or less per month. Those over 60 can pay more than $50 per month. There is a significant difference in premiums. Your rates will increase each year.

How Much Does Critical Illness Insurance Cost?

Yearly premiums can vary greatly based on your age and many other factors. You could pay as little as $100 to $1000 annually. The older you are, the higher the premiums. Here are some of the main factors:

Age and gender: Costs go up as you age.
Your current health: Do you have pre-existing conditions?
Policy length: Is the policy valid for 10 years, more?
Coverage limits: Do you set your limits at $50,000, $100,000, or more?
Add-ons: Did you add riders to expand the scope of your policy?

Is Critical Illness Insurance Worth It?

It can give you peace of mind in knowing you will have some financial protection should you be diagnosed. Even though you will receive some care through your health insurance in Canada, it doesn’t cover everything. It is particularly worth it if:

You don’t have access to it through your employer benefits plans
You don’t have an emergency fund saved up
You are self-employed
You would be without an income if you were unable to work

Critical Illness Insurance Pros and Cons

There are advantages and disadvantages to every insurance product. Some make sense for you, while others may not, depending on your lifestyle.

Pros:

It helps to protect your savings
You won’t have to draw from RRSPs and other retirement income
You can use the money for daily expenses
You can focus on recovery

Cons:

Premiums increase as you age
Pre-existing conditions are not covered
There may be waiting periods in some instances
Some illnesses are not covered

Critical Illness Insurance FAQs

How Much Critical Illness Insurance Do I Need?

The amount of protection you need will depend on your lifestyle. Some people may require minimal while others require higher limits. Here are some things to consider:

The amount of income you will lose if you can’t work
Does your partner have to take time off work?
Your expenses – mortgage, bills, food, loans, credit cards, other costs
Healthcare requirements
Would you require childcare?

Speak with an insurance advisor to perform a thorough assessment of your insurance needs.

Can You Get Child Critical Illness Insurance?

Yes, it is called child critical illness insurance (CII). You can use it to cover medical costs, supplement your income to care for your child and cover other costs related to health care for your child.

Does Health Insurance Cover Critical Illness?

It depends on your provider and your policy type. Many health insurance plans do not provide the full breadth of coverage. Your provincial health plan only provides limited coverage. It does not provide income replacement or help with your living expenses. Taking out a separate policy ensures you have maximum protection.

Are Critical Illness Insurance Payouts Taxable?

You will typically receive a lump sum payment that is tax-free. You will not pay tax on it. For example, if you have $50,000 in coverage, you will receive the full amount.

Can I Cancel Critical Illness Insurance?

Yes. Most insurers provide you with a 30-day window to cancel your plan and receive a refund. After this, you can still cancel your policy. However, you may not be able to recover the premiums paid up to that point. Check the terms and conditions of your policy.

Does Critical Illness Cover Pre-Existing Conditions?

No. It does not cover pre-existing conditions. If you have an existing medical condition, you must disclose it during the application process.

Are Critical Illness Insurance Premiums Tax Deductible?

No. You cannot claim premiums as tax-deductible when filing your personal income tax return in Canada.

What Is the Waiting Period for Critical Illness Insurance?

Waiting periods are commonly 30 to 90 days. The time depends on your insurer and other considerations such as the type of critical illness claimed.

Compare Critical Illness Insurance Quotes

You never know when you could be diagnosed with a critical illness. Take peace of mind in knowing you have coverage in place when you need it most. Contact our advisors today to compare quotes.

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