12 Critical Illness Insurance Myths You Must Know Before Purchasing a Policy

Critical illness insurance is one of those insurance types that often gets neglected. Here are a few statistics based on Manulife’s disability and critical illness calculator (a link is provided at the end of this article). If you are 30 and 40 years old respectively, here are your chances to get a critical illness before the age of 65:

30 years’ old		40 years’ old
Female	Male	Female	Male
19%	27%	18%	26%
~1 out of 5 women	~1 out of 4 men	~1 out of 5 women	~1 out of 4 men

Critical illness insurance provides funds as a lump sum when you are diagnosed with an illness that is named in the policy. You can decide how to spend it: to get the most modern treatment for your diseases, the best available medication or as an income source so you can recover without having to go to work. If you are thinking about getting this coverage, our licensed insurance brokers who work with more Canadian companies (20+ life insurers than most other agencies) will provide you with a no-obligation critical illness insurance quote, or will simply answer any of your questions. It is always helpful, though, to know what is truth and what is myth before purchasing any type of insurance, which is why we put together a list of 12 critical illness insurance myths. Critical Illness Insurance Myth #1: Disability insurance and critical illness insurance are the same. Truth: Disability insurance provides a stream of income replacement for a limited time (it could be months or years depending on the policy). Disability covers the loss of limbs, eyes and hearing. Critical illness, however, refers to the contraction of a deadly disease, such as cancer, heart attack or stroke. A one-time lump sum payment is provided to help with the costs of treatment, travel or time off work. Critical Illness Insurance Myth #2: My policy covers all critical illnesses. Truth: Critical illness policies differ. Some cover three ailments and some cover 20. A broker will direct you to the best policy for your risk factors. Critical Illness Insurance Myth #3: If diagnosed with a critical illness listed in the policy, I automatically get the benefit. Truth: Critical illnesses must meet the definition in your policy, including the severity and duration. The illness must also be properly diagnosed in order for the benefit to be paid out. Critical Illness Insurance Myth #4: If I have a critical illness, my chances of survival are very low. Truth: Modern medicine is a wonderful thing! These days, more than 60 per cent of Canadians live longer than five years after being diagnosed with cancer, and more than 90 per cent survive a heart attack. Recovery time can be long and uncomfortable, but a diagnosis does not automatically mean death. Critical Illness Insurance Myth #5: Cancer coverage means all types of cancer. Truth: Cancer must meet the definition in your policy. There are many different types of cancer, and many different definitions to protect against this risk. Critical Illness Insurance Myth #6: Coverage starts as soon as the policy is approved. Truth: To prevent insurance fraud (coverage purchased when an illness has already taken hold) critical illness insurance policies come with a waiting period. If you are ill and without insurance, you may qualify for simplified issue insurance, and everyone can qualify for guaranteed issue insurance. Critical Illness Insurance Myth #7: I can’t get coverage if I have a precondition. Truth: Critical illness insurance is available in many cases with traditional underwriting and no-medical underwriting. Critical Illness Insurance Myth #8: All critical illness insurance policies’ premiums increase over time. Truth: If you buy a level-premium policy, your premium will not increase. Critical Illness Insurance Myth #9: I am entitled to the full benefit listed in my policy. Truth: Depending on your situation, you may get a partial benefit. For example, if you do not meet all the conditions. Critical Illness Insurance Myth #10: My policy should cover every single critical illness known to man—even the really obscure ones! Truth: Most people opt for the “Big-3,” which covers cancer, heart attack and stroke. Big-3 coverage accounts for more than 70 per cent of possible critical illness cases. If you have a specific concern about other illnesses due to family history or predisposition, those can be added. The fewer illnesses named, the lower your premium. Critical Illness Insurance Myth #11: If you are not diagnosed before the term of your policy ends, those premiums are wasted. Truth: Life insurance coverage is never wasted as it protects you against risk, but you can get a return of premium rider (if your policy does not automatically have this feature). A return of premium (ROP) remits your premiums if the coverage is not used. Critical Illness Insurance Myth #12: Provincial coverage will take care of all my critical illness needs. Truth: Coverage differs from province to province and you may want treatments that are not covered by the government plan. According to Globe and Mail, there are cases where people had to pay out-of-pocket for injections to prevent nausea during cancer treatment. The price tag was $1,800 (read more here). We hope you found this list of critical illness insurance myths helpful so you can be be very well informed before getting your critical illness or disability insurance quote. *Link to the risk calculation tool, Manulife: http://www.insureright.ca/what-is-your-risk/