Critical illness insurance can protect you financially if you suffer a serious illness. It provides a tax-freeTax-free Money that you do not pay tax on.+ read full definition cash payment upon diagnosis of a serious medical condition.
4 key features
- Covers major illnesses – Policies generally cover illnesses such as cancer, heart attack, coronary artery bypass surgery, stroke, blindness, deafness, paralysis, kidney failure and multiple sclerosis.
- Short waiting period – You must survive your illness after diagnosis for a short time period – typically about 15 to 30 days – to receive the payment.
- Paid regardless of ability to work – Unlike disability insuranceDisability insurance Insurance that gives you income in case you get sick or hurt and can’t work.+ read full definition, the payment is not linked to your inability to return to work.
- Use the money for any purpose – The payment is made in a taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition-free lump sum, and you can use the money any way you want.
Survival rates increasing
With improvements in medical treatments, people are recovering from serious illnesses – such as heart attacks, strokes and cancer – that would have been fatal in the past.
For example, according to the Canadian Cancer Society, in the 1940s, only about 25% of people diagnosed with cancer survived. Today, the survival rate is over 60% and higher still for many common cancers, such as thyroid cancer with a survival rate of over 90%.
While the survival statistics are encouraging, a serious illness can still lead to significant additional costs that aren’t covered by our universal healthcare system or employer health plans.
Potential costs of a major illness
- Replacing your lost income
- Moving to a new home or renovating your existing home
- Having a spouse take time off work
- Seeking medical treatment outside Canada
- Hiring a nurse or other caregiver
A living benefit
Critical illness insurance is called a “living benefitBenefit Money, goods, or services that you get from your workplace or from a government program such as the Canada Pension Plan.+ read full definition” because unlike life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition, the payout goes to you, the policyholder, rather than a beneficiaryBeneficiary The person(s), institution, trustee or estate you choose to give money, property or other benefits when you die. You may name beneficiaries in your will, insurance policy, retirement plan, annuity, trust or other contracts.+ read full definition. So you decide how the cash can best be used – whether it’s to cover additional costs or provide an extra perk after or during recovery, such as a vacation.
Factor in the cost of recovery
More people are surviving and recovering from serious illnesses – but there can be many additional costs that aren’t covered by our universal healthcare system or employer health plans.
Policies can differ significantly – so check the conditions and illnesses covered carefully before you buy.