Critical illness insurance works in a very simple way: if you are diagnosed with any of the critical illnesses listed in your policy and survive the waiting period (typically it is 30 days), you will receive a lump sum, also called critical illness benefits, that you can use towards any individual needs: critical illness treatment, experimental treatment abroad, drugs that are not covered under provincial plans or simply treating it as an additional income. It’s Important to consider that once this amount is spent, it is gone, so you will need to use this coverage wisely.
That’s why critical illness insurance is different from disability insurance, which protects your income, as opposed to a lump sum payment. Critical illness benefits give you a good opportunity to treat a diagnosed illness in its early stage.
Typical conditions covered by critical illness insurance
Typical conditions covered by an individual critical illness insurance policy are: cancer, stroke, heart attack, Alzheimer’s disease, aortic surgery, aplastic anemia, bacterial meningitis, benign brain tumour, blindness, coma, coronary artery bypass surgery, deafness, heart valve replacement, kidney failure, loss of independent existence, loss of limbs, loss of speech, major organ failure on waiting list, major organ transplant, motor neuron disease, multiple sclerosis, occupational HIV infection, paralysis, Parkinson’s disease, and severe burns. Critical Illness coverage can though vary across insurance providers.
Things to consider when getting critical illness insurance
Several aspects that are important when getting critical illness insurance quote are:
Return of Premiums: Some policies return your premiums after a predetermined time period if you were not diagnosed with a critical illness.
Early assistance benefits: Reduced benefit (e.g. 10% of your overall benefit without reducing your total benefit for future claims) in case you are diagnosed and survive the survival period for such diseases as: Early prostate cancer, early breast cancer, early skin cancer, etc.
Second event: If you are diagnosed with a second critical illness, you receive an additional 50% of the overall critical illness policy benefits over the initial (base) benefit. It could be offered as an additional policy option (optional rider).
Guaranteed premiums: How long are your premiums guaranteed for?
Number of conditions covered: what critical illness conditions does your policy cover? Remember, that treating many critical illnesses even in an early stage can be very costly.
Conversion options: Can your critical illness policy be converted into another one (e.g. Term 10 into Term 20) without additional medical exams?
Saving on critical illness insurance
- Being young is beneficial: If you are young when you are apply for a Critical Illness policy, you benefit from lower premiums.
- Great health history is rewarded: If you were healthy in the past, it will definitively find its reflection in the premiums. Having issues with health and especially defined pre-conditions can drive your premiums up or even exclude some illnesses from your insurance policy.
- Age rounding is tricky: If you are getting a critical illness insurance policy, make sure that your age rounds down and not up, i.e. if you are going to be 50 years old on December 31, buy the policy in the first 6 months of the year where your age is still rounded down to 49 and not 50 (e.g. in March or April).
- Dealing with Cancer cases: Insurance companies may treat cancer cases differently (often considered as high-risk insurance) – the easiest way is to talk to an insurance broker who is knowledgeable in this space.
- Annual vs. monthly payments: Choosing annual payments saves your insurer some administrative costs and many insurance providers reward for that with lower premiums for the same critical illness coverage.
- Avoid depressions – it can become really expensive: Mental health matters – those with a history of depressions pay way more than others.
- Say no to guaranteed issue Critical Illness policy: People with good health do not need a guaranteed issue Critical Illness (these are policies that do not require a medical exam but should only be taken by people with serious health issues) – do a health check / exam and enjoy lower Critical Illness insurance premiums.
- Other tips: Contacting an experienced, licensed broker (see a button below) will help you to find other ways to reduce insurance premiums of your critical illness insurance in Canada. Discussion with broker is entirely free and there is absolutely no obligations to buy. You can also get a free, individual critical illness insurance quote tailored to your particular situation.