A recent study found over 8 million working Canadians are at risk of going into debt, delaying retirement or downsizing their home in order to cope with a critical illness. When a critical illness occurs, the primary financial impacts are loss of income and inability to meet living expenses.
Critical illness insurance was created (by a doctor, not an insurance company) to help address these issues. It provides a lump-sum payment upon diagnosis of any one of up to 25 serious illnesses, including heart attack, stroke and cancer.
In reviewing a person’s financial situation, we often find protecting one’s ability to earn an income is overlooked. Disability insurance is the primary vehicle we recommend individuals utilize to manage this risk. Critical illness insurance is NOT a substitute for disability insurance; however, it can be a good complement in many situations.
Reasons to Consider
The benefit helps mitigate financial strain after diagnosis so that the focus can be on seeking treatment and recovery. Considerations for use of the benefit might include:
- To pay for medical costs/treatments not covered by health insurance
- To access to immediate treatment to avoid delays (eg. MRI, cancer treatment)
- As income replacement for not only the insured, but also insured’s spouse to take time off work to care for family member(s) impacted by illness
- To hire extra childcare or a caregiver to help out at home
- People are being diagnosed with illnesses sooner, and surviving longer.
- Of 10 healthy male adults, 3 will be diagnosed with a critical illness before age 65 (2.7 of 10 healthy females)
- More than two thirds (72%) of critical illness claims in Canada are for cancer.
Beware! Changing Definitions
Not all critical illness insurance policies are created equal. Although the industry has introduced some benchmark definitions over the past 5-7 years, there are definite complexities when comparing the options – especially benefit amount, policy term, and various riders and definitions unique to each carrier.
We would recommend reviewing your options with a trusted financial professional to ensure alignment with your overall financial situation.
Give us a call if you would like more information or have questions.