Critical illness insurance is a relatively new type of coverage now available in Canada. Dr Marius Barnard, a cardiologist from South Africa developed it in the late 1980s. Dr Barnard found that many heart transplant patients were not recovering as well as expected after their surgery. There was no medical reason for this. Dr Barnard took a closer look into the personal situations of his patients and came to the realization that many were in financial ruin as a result of their illnesses. Their financial struggles were negatively affecting their health and recovery. Dr Barnard approached a local insurance company with his concern and he played a major role in developing and designing the product we now call ‘critical illness’.
Canadian statistics show that 1 in 2 men and 1 in 3 women will develop heart disease in their lifetime, which is why critical illness coverage is the fastest growing insurance product in Canada. It is estimated that 1 in 3 of us will develop some sort of cancer during our lifetime and that Canadians are more likely to experience a critical illness than they are to die before the age of 75.
If you become ill, your focus should be on recovery and regaining your health. Critical illness helps survivors manage the costs associated with recovery. In the simplest terms, if you survive for 30 days after being diagnosed with any of the conditions covered by the policy, a tax free* lump sum benefit is paid to you. The payout can range between $10,000 and $2,000,000, depending on the policy and your needs.
The critical conditions covered vary slightly depending on the insurance company you are dealing with but generally the following conditions are covered
| Heart Attack |
Cancer |
| Stroke |
Deafness |
| Bypass Surgery |
Kidney Failure |
| Multiple Sclerosis |
Parkinson's Disease |
| Severe Burns |
Loss of Speech |
| Motor Neruon Disease |
Coma |
| Blindness |
Organ Transplant |
| Paralysis |
Heart Valve Replacement |
| Benign Brain Tumor |
Aortic Surgery |
| Loss of Independence |
Loss of Limbs |
| Occupational HIV |
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Please note that critical illness is not a replacement for life, disability or health insurance.
Life insurance pays upon death, disability coverage pays if you cannot work and health plans, even government health plans, may not provide coverage for all the treatments or medicines you may need. Critical illness is that safety net that protects you and your family from the extra expenses associated with an illness.
Critical illness allows you to recover on your own terms. You can use your benefit in any way you choose.
· Avoid withdrawing money from an RRSP or other savings or investments
· Keep a business going during recovery (example -you may need to hire a person to run it until you can return to work)
· Pay down debts such as a mortgage or a loan
· Choose medicine and treatments not covered by group, personal or government plans
· Renovate your home or relocate
· Replace lost income so you have choices – for instance, your partner can take time off work to be with you or you may want to consider early retirement.
· Help maintain your family’s lifestyle
· Make a dream come true
The goal is to stay healthy but it is nice to know that in the event of a critical illness you and your loved ones will be looked after financially. The best part about critical illness is that if you stay healthy the insurance company will return all of your premiums to you! An insurance policy that returns all of your money if you do not claim – critical illness is a pretty good deal, something everyone should take a look at.
Speak to an advisor at Langlois Financial Services to see if critical illness insurance makes sense for your personal situation.
* Consult your tax advisor for current tax interpretations.