Stay Prepared for the Unexpected with Critical Illness Insurance in Canada

What Are the 3 Main Differences Among Critical Illness Insurance, Life Insurance, and Disability Insurance?

Critical illness insurance, life insurance, and disability insurance are all types of insurance policies that provide financial protection in the event of an unexpected event. However, the specific types of events covered and the benefits provided by each policy can differ. 

Critical illness insurance provides a lump sum payment if the policyholder is diagnosed with a serious illness, such as cancer, heart attack, or stroke. This payment can be used to cover medical expenses, lost income, or other expenses related to the illness.

Life insurance provides a payment to the policyholder’s beneficiaries upon their death. This payment can be used to cover funeral expenses, and outstanding debts, or to provide financial support for loved ones.

Disability insurance provides a regular income payment to the policyholder if they are unable to work due to an injury or illness. This payment can be used to cover living expenses, medical bills, and other expenses related to the policyholder’s disability.

Do I Need a Medical Exam for Critical Illness Insurance in Canada?

The need for a medical exam in Canadian critical illness insurance depends on factors like the provider, age, and medical history. Some policies may require an exam for approval, while others may not. Even without an exam, insurers often inquire about medical history and may request records to assess risk. Given policy variations, it’s crucial to thoroughly review terms and conditions to understand any specific requirements or limitations before purchasing.

How Does Critical Illness Insurance in Canada Work?

Critical illness insurance in Canada typically functions by offering a lump sum payment to the policyholder upon the diagnosis of a covered serious illness. This payment can be utilized to address medical expenses, lost income, or other related costs. The specifics, including the types of covered illnesses and the payment amount, vary based on the policy and insurance provider. The policyholder, in exchange for this coverage, pays a monthly or annual premium. Upon a confirmed diagnosis of a covered illness, the policyholder must provide proof to the insurance provider to receive the lump sum payment, typically processed within a few weeks.

What Specific Diseases Are Covered by Critical Illness Insurance in Canada?

In 2018, the Canadian Life and Health Insurance Association (CLHIA) revised its Critical Illness Benchmark Definitions to establish consistent terminology for prevalent conditions and afflictions throughout the industry. The 26 conditions commonly covered by most carriers include:

Cancers and Tumours:

• Benign Brain Tumour
• Cancer (Life-Threatening)

Cardiovascular:

• Aortic Surgery
• Coronary Artery Bypass Surgery
• Heart Attack
• Heart Valve Replacement or Repair
• Stroke (Cerebrovascular accident)

Neurological:

• Bacterial Meningitis
• Dementia, including Alzheimer’s Disease
• Motor Neuron Disease
• Multiple Sclerosis
• Parkinson’s Disease and Specified Atypical Parkinsonian Disorders

Vital Organs:

• Kidney Failure
• Major Organ Failure on Waiting List
• Major Organ Transplant

Accident and Functional Loss:

• Acquired Brain Injury
• Blindness
• Coma
• Deafness
• Loss of Independent Existence
• Loss of Limbs
• Loss of Speech
• Paralysis
• Severe Burns

Other:

• Aplastic Anemia
• Occupational HIV Infection

Is Coverage for Pre-existing Conditions Included in the Critical Illness Insurance Policy?

They don’t cover your pre-existing conditions, while most critical illness plans are medically underwritten and typically exclude coverage for individual’s pre-existing conditions, if you have a family history of cancer, heart disease, or another serious condition, supplemental critical illness insurance might offer you additional peace of mind.

Should I Get Critical Illness Insurance With More or Less Coverage?

Determining your critical illness coverage depends on monthly living expenses and recovery duration. Experts suggest a minimum of 60 months to account for the average recovery period. Considerations include the type of illness and treatment, with conditions like cardiovascular diseases requiring longer support. To estimate coverage needs, multiply your monthly income by the support duration or calculate monthly expenses and the shortfall during incapacitation, then multiply by the necessary support duration. These methods offer a reliable approach to assessing your critical illness insurance needs.

What Is the Optional Coverage for Critical Illness Insurance in Canada?

Employers offer optional critical illness insurance as an additional benefit. Employees who choose to purchase coverage can pay premiums through payroll deductions, and there is no obligation to participate. Employees enjoy two key benefits: competitive rates, leveraging their employer’s group buying power for better insurance coverage rates than they would likely secure individually, and the opportunity to obtain coverage up to a specified amount (up to $50,000) without answering any health questions in certain workplace plans. If you are employed, check with your employer about the benefits they offer. Some employers provide critical illness insurance as part of their employee benefits package.

What Is Mortgage Critical Illness Insurance in Canada?

Optional mortgage insurance includes life, illness, and disability coverage designed to assist with mortgage payments or pay off the remaining mortgage balance. Specifically, mortgage critical illness insurance may cover payments if you are unable to work due to a severe injury or illness. Canadian residents aged 18 to 55 can apply for Mortgage Critical Illness Insurance through their mortgage-associated financial institution.

When Does Critical Illness Insurance End?

Ensure that the duration of your critical illness cover aligns with your life insurance cover; based on your age, you have the flexibility to select coverage ranging from 5 to 40 years. When deciding on your coverage period, it’s important to take into consideration factors such as the duration of your mortgage or the anticipated financial independence of your children.

How Much Does It Cost to Get Critical Illness Insurance in Canada?

Your insurance premiums are determined by factors such as the plan type, payment period, assigned sex, age, smoking status, and medical history. For instance, a Term 10 policy for a non-smoking, 35-year-old woman may cost around $32.40 per month, while for a man of the same age, it’s approximately $32.13 per month. In the event of a covered illness, the individual would receive $100,000.

Is It Worth Getting Critical Illness Insurance in Canada?

Providing reassurance by offering financial protection upon diagnosis, critical illness insurance becomes especially valuable if you lack coverage through employer benefits, lack an emergency fund, are self-employed, or would face income loss due to an inability to work. While health insurance in Canada covers some care, critical illness insurance fills important gaps.

What Are the Advantages and Disadvantages of Critical Illness Insurance in Canada?

Like many other types of insurance, critical illness insurance may also have its advantages and disadvantages, which we will discuss below.