November 2011

Critical illness insurance: because life has changed

Critical illness insurance is a rapidly growing segment of Canada’s personal insurance market. Why? No doubt because it meets a pressing need.

More and more Canadians are discovering the importance of protecting themselves against the financial risks associated with critical illness. And among the three components of a comprehensive coverage strategy, along with disability insurance and extended health coverage, the popularity of critical illness insurance is soaring. In the past five years alone, sales of this product by insurance companies have risen by more than 80%.

But what exactly is critical illness insurance?

A simple answer to a complex need

Critical illness insurance is a direct response to the fact that… life has changed: we no longer necessarily die from our critical illnesses, but we need to find a way of dealing with the financial burdens they impose.

This coverage can be offered on an individual basis or through a group insurance program, and can also be combined with other products, such as life insurance. How does the coverage work? It’s simple: once the diagnosis of a critical illness has been confirmed, a predetermined benefit is paid to the client. This is a tax-free payment. The basic policy generally provides $25,000, which is enough to cover a long period of mortgage payments while the person doesn’t have an income, for example, or a series of consultations at a private clinic, or even out-of-country health care. The amount of coverage can be higher, although the premiums will naturally be higher, too.

Access to invaluable services

This insurance works on the principle that you receive a lump sum to help you cover the extra costs incurred because of the illness. You can use it for things such as home care nursing, housekeeping expenses, help in preparing meals, personal care, yard work – in short, anything that can give you a boost and help you recover more quickly.

As well, these policies sometimes give access to support and assistance services that can even include confirmation of your diagnosis by a world-class medical centre and recommendations for specialized institutions (more information about these services).

Not just for grown-ups

Note that there are also critical illness insurance plans available for children. Even though children themselves don’t have financial responsibilities, if they are stricken with a critical illness, the financial demands on their parents can be substantial.

One parent will often decide to take time off work, or even an unpaid leave of absence. Specialized care may only be available in large cities, resulting in transportation and accommodation expenses for child and parents. Family life will be turned upside-down and help may be required for all kinds of things: meals, childcare for the other children, housework, maintenance, psychological support... Critical illness insurance for children can help to defray these extra expenses.

Every year, 1,300 young Canadians are diagnosed with cancer. An estimated 40% of Canadian women and 45% of Canadian men will face this same diagnosis in their lifetime. Critical illness insurance is one way of ensuring, while you are still in good health, that this probable medical trauma won’t be accompanied by a very avoidable financial one.

One woman’s story

It’s hard to realize how many unexpected costs can be associated with illness, whether for specialized care, esthetics, home care, accommodation, transportation, even parking during treatments!

A moving story of her experience was recorded on video by Veronica, a young woman of 36 diagnosed with a brain tumour. Veronica explains how her critical illness insurance enabled her, among other things, to take a trip abroad to recharge her batteries, to cover the cost of the unpaid leave that her husband was forced to take, and to provide psychological support for her children.

If you would like to see this video, simply ask your financial services professional.