Critical Illness Insurance
More and more Canadians concerned about the financial costs of major disease are turning to Critical Illness Insurance to gain peace-of-mind and protect their savings.
Critical Illness Insurance (CI) provides a lump sum payment to the beneficiary who has contracted or suffers from a major disease. This allows them to “soldier on” in the short-term and pursue treatment without the concern over immediate expenses.
What you need to know
Broadly, the usual illnesses covered are cancer, heart disease and stroke; more specifically paralysis, dementia, Parkinson’s, loss of limbs and major organ failure are also covered, but each carrier and policy needs to be reviewed closely.
Like qualifying illnesses, each policy and carrier has a different list of exclusions, and should be reviewed before agreeing to a policy. Typically, CI does not cover self-inflicted injury, attempted suicide, drug-use, war participation or operating a vehicle while intoxicated.
Critical Illness Insurance is not a reimbursement of medical expenses, specifically. The beneficiary who is typically the insured-person decides how the money will be spent.
The likelihood of contracting a covered illness is much greater than most people believe. According to the Canadian Cancer Society one-third of Canadians will contract cancer. The Heart and Stroke Foundation states that 50% of heart attack victims are under the age of retirement, and 75% of stroke sufferers will be left permanently disabled. Although, CI does not cover the disability, but rather the disease that caused it, the result is that employment possibilities and earning potential may be severely limited or eliminated.
The proceeds from CI can be used to modify homes and automobiles allowing recipients to maintain their independence. Every day bills can be covered, as well as accessing cutting-edge medical treatment to combat the disease. The funds can also be used to spend more time with family before health deteriorates further.
The recommended amount of coverage is approximately six months of salary plus an additional six months of expenses plus three months of a spouse’s salary plus an estimation of what home modifications might be needed. An individual earning $100,000 per year with $8,000 of expenses per month whose spouse makes $120,000 per year should seek a minimum of $128,000 of CI coverage, for example.
Depending on your age and the amount of coverage, premiums can start at under $1,000 per year and increase to $1,000 per month when someone is over 70 years of age.
The Bottom Line
Like all insurance, Critical Illness Insurance should be a planned, reasoned purchase made well in advance of actually needing it. With so many options and details to consider please contact Elementus Wealth Management Inc in order to ensure the proper fit for you and your needs.
Jeff Devlin, CFP (2010-2022)
Elementus Wealth Management Inc.