The Benefits Of Critical Illness Insurance For Canadians (2024)

The Benefits Of Critical Illness Insurance For Canadians

Why Critical Illness Coverage is Crucial for Canadians

Critical illness insurance provides financial protection and peace of mind for Canadians diagnosed with specified severe illnesses. With the rise of critical illness rates in Canada, this coverage is becoming increasingly important.

According to the Government of Canada, nearly 1 in 2 Canadians will be diagnosed with cancer in their lifetime (source: The Heart and Stroke Foundation also reports that every five minutes there is a person dies from heart conditions or stroke in Canada (source: With statistics like these, the likelihood of being diagnosed with a critical condition is relatively high.

When facing a devastating diagnosis, the last thing you want to worry about is money. Critical illness insurance provides a tax-free lump sum payment when diagnosed so you can focus on recovery instead of financial stress.

This guide will explore the key benefits this coverage provides and why it’s so valuable for Canadians.

Key Benefits of Critical Illness Insurance in Canada

Key Benefits of Critical Illness Insurance in Canada
Key Benefits of Critical Illness Insurance in Canada

There are several advantages to having critical illness protection. Here are some of the main benefits:

Provides Financial Support During Recovery

The primary value of critical illness insurance is the lump sum payment you receive when diagnosed. This tax-free cash can be used to cover:

  • Out-of-pocket medical expenses like private treatments, prescription drugs, medical equipment, and accessibility modifications to your home.
  • Replacing lost income if you’re unable to work.
  • Regular living expenses like mortgage/rent, groceries, transportation, utilities, and childcare.
  • Travel costs for out-of-country medical treatments.

Having this financial safety net allows you to focus entirely on your health instead of worrying about money.

Related: Mortgage Protection Insurance

Gives Flexibility in Using the Benefits

Unlike some other insurance products, critical illness has very few restrictions on how you can use the cash payout. Once you receive the lump sum, you can allocate it as you see fit.

For instance, you may choose to:

  • Set aside a portion for medical needs like private nursing care or experimental treatments.
  • Pay off debts, so you have reduced expenses during recovery.
  • Invest the funds to generate interest income.
  • Take a dream vacation.
  • Make home modifications for accessibility.
  • Donate to charity.

The key advantage is that the money is yours to use however needed, reducing financial headaches.

Provides Coverage Even for Pre-Existing Conditions

Some critical illness insurance companies like Canada Protection Plan provide coverage even if you have a pre-existing condition. Their policies allow you to get coverage for cancer, heart disease, or both.

Access to this coverage is highly beneficial for Canadians with chronic illnesses or a family history of disease. It gives them the same financial protection as healthier individuals if they face a devastating diagnosis.

Offers Add-On Coverage for Family

Most critical illness policies allow you to add coverage for your spouse and children. Some insurers like Manulife even provide child critical illness insurance.

Insuring your family provides complete protection. That way, if your spouse or child suffers a critical illness, you’ll have funds to cover their expenses as well.

Gives Peace of Mind

Knowing you have critical illness coverage gives you confidence that your family will be financially secure if faced with a serious diagnosis. You can stop worrying about money and just concentrate on getting better.

This reduced stress and financial control is a major emotional benefit that enhances your quality of life.

Additional Advantages of Critical Illness Insurance

Along with the main benefits discussed already, critical illness insurance has several other valuable advantages:

Covers Many Common Critical Illnesses

Most policies provide coverage for around 25 medical conditions. According to Statistics Canada, cancer and heart disease accounted for nearly half (44.3%) of all deaths in Canada in 2021 and remained the two leading causes of mortality in the country. So, you’re protected against the most frequent critical diagnoses. (source:

Simplified Application Process

Insurers like Canada Life offer easy online applications for critical illness insurance. You can get quotes and purchase coverage entirely online in many cases.

Premium Flexibility

Some policies allow you to lock in premiums for ten or more years so they don’t increase annually. Others have the return of premium riders, so you get your money back if no claims are filed. This flexibility reduces the financial burden.

Provides Access to Specialists and Support Services

Depending on your insurer, you may get value-added services with your critical illness policy. This can include access to leading medical specialists, counselling, childcare, legal consultations, and more.

Critical Illness Insurance Costs in Canada

Critical illness insurance is affordable, especially if purchased when young and healthy. Monthly premiums often range from:

  • Ages 30 and under: $15 – $35
  • Ages 35 to 45: $30 – $85
  • Ages 50 to 60: $60 – $200
  • Ages 65+: $100 – $300+

Factors that increase your costs include being a smoker, having pre-existing health issues, and buying higher coverage amounts. Having a family history of disease can also raise premiums.

Despite rising costs with age, critical illness insurance remains inexpensive compared to other coverages. It’s worth paying the premiums for the financial reassurance it provides if diagnosed with a major illness.

Importance of Critical Illness Insurance for Medical Costs

Importance of Critical Illness Insurance for Medical Costs
Importance of Critical Illness Insurance for Medical Costs

Let’s look at an example. Say you are unfortunately diagnosed with cancer, which costs $60,000 for treatment over a year. As a Canadian, your provincial health insurance may cover some costs, but you still have to pay for medications, medical equipment, travel, and other expenses.

This could easily total $15,000 in out-of-pocket costs.

However, if you had a critical illness policy with a $100,000 payout, you’d be able to cover all your cancer expenses. The remaining $85,000 lump sum could help pay your living costs while you take time off work for treatment.

As you can see, critical illness insurance can provide crucial financial relief and savings in the event of a severe medical diagnosis. Don’t be caught off guard by expensive health costs.

Who Needs Critical Illness Insurance?

Critical illness insurance is valuable for nearly all Canadians:

  • Individuals – Protects you if you can’t work due to illness. Allows you to pay medical and living costs.
  • Families – Covers expenses if a spouse or child falls critically ill. Prevents financial hardship.
  • Business Owners – Safeguard your income, assets, and business if you become seriously sick.
  • Employees – Provides additional coverage beyond workplace disability benefits.
  • Seniors – Helps cover retirement savings shortfalls if diagnosed later in life. Pays for private geriatric care.

Of course, the coverage is most urgent for those at higher risk due to family history, chronic conditions, or high-risk jobs.

Related : Disability Income Insurance

How Does Critical Illness Insurance Work?

Critical illness insurance has a straightforward process:

  1. Choose coverage – Select your optimal policy, coverage amount, and add-ons. Get a quote online or through an advisor.
  2. Apply and get approved – Complete the insurer’s application and health questionnaire. You’ll then get approved.
  3. Pay premiums – Pay your monthly or annual critical illness insurance premiums to keep coverage active.
  4. Get diagnosed – If you’re diagnosed with a condition covered by your policy, your doctor will confirm it.
  5. File a claim – Submit your critical illness diagnosis claim to the insurance company along with supporting medical records.
  6. Receive payout – If approved, the insurer will pay out your lump-sum tax-free critical illness benefit.

Before filing, ensure you understand your insurer’s claim process and survival period requirements. Also, tell your loved ones about your critical illness coverage so they can submit a claim if you’re incapacitated.

List of Critical Illnesses Covered

Most critical illness insurance policies cover around 25 conditions. Here is a list of 25 common conditions covered by most critical illness insurance policies:

  1. Cancer
  2. Heart Attack
  3. Stroke
  4. Coronary Artery Bypass Surgery
  5. Kidney Failure
  6. Major Organ Transplant
  7. Multiple Sclerosis
  8. Aortic Surgery
  9. Blindness
  10. Paralysis
  11. Severe Burns
  12. Coma
  13. Loss of Speech
  14. Motor Neuron Disease
  15. Parkinson’s Disease
  16. Dementia, including Alzheimer’s Disease
  17. Major Organ Failure on Waiting List
  18. Heart Valve Replacement or Repair
  19. Loss of Limbs
  20. Deafness
  21. Benign Brain Tumor
  22. Bacterial Meningitis
  23. Encephalitis
  24. Primary Pulmonary Hypertension
  25. HIV Infection

Pre-existing conditions are typically not covered. Also excluded are mental health conditions, musculoskeletal conditions, and illnesses caused by drug or alcohol use.

Tips for Finding the Best Critical Illness Insurance Policy

Tips for Finding the Best Critical Illness Insurance Policy
Tips for Finding the Best Critical Illness Insurance Policy

Not all critical illness insurance policies are made equal. When buying coverage, look for:

  • Comprehensive coverage – Policies covering 25+ conditions are best. Avoid limited plans.
  • High payout limits – Maximum payments over $100,000 provide better protection.
  • Long-term lengths – 10 or 20-year terms lock in rates and prevent premium hikes.
  • Added benefits – Return of premium, disability waiver, and family coverage riders provide enhanced value.
  • Strong insurer – Choose an established company like Sun Life or Canada Life. Avoid risky upstarts.
  • Simple application – Opt for simplified issue plans with fast online applications.

Working with an experienced insurance advisor makes finding the right critical illness policy much easier. They can explain your options, answer questions, and ensure you get properly covered.

Comparing Critical Illness Insurance vs Life Insurance

Critical illness insurance differs from life insurance in a few key ways:

  • Payout Timing – Critical illness pays while you’re alive after a diagnosis. Life insurance pays a death benefit to beneficiaries after you pass away.
  • Benefit Use – Critical illness gives you a lump sum to use freely. Life insurance gives your beneficiaries money to cover expenses.
  • Eligibility – Anyone can buy critical illness insurance. Life insurance may have health restrictions.
  • Premiums – Critical illness premiums are usually lower than life insurance.
  • Policy Term – Critical illness terms are usually shorter, like ten years. Life insurance is lifelong protection.

Both offer financial protection and peace of mind. Having both critical illness and life insurance ensures complete coverage.

Where to Buy Critical Illness Insurance in Canada

There are three main options for getting coverage:

  1. Work Benefits – Some employee group benefit plans include critical illness insurance. Premiums are paid through payroll deductions.
  2. Individual Policies – Buy from a life insurance company directly. Can purchase online or via an insurance advisor.
  3. Group Associations – Members of professional and alumni associations can access group critical illness plans.

Leading insurance companies offering individual critical illness insurance include Sun Life, Canada Life, RBC Insurance, and Manulife.

Get Covered with Critical Illness Insurance Today

Hopefully, this guide has shown the immense value of critical illness insurance for Canadians seeking financial protection from serious health issues.

At Insurance Direct Canada, our advisors make it easy to compare quotes from top insurers and find affordable critical illness coverage that fits your needs and budget.

Having robust critical illness insurance will give you peace of mind that the unexpected won’t derail your financial stability. Don’t wait until it’s too late – get covered today to safeguard your future!

Critical Illness Insurance FAQs

Have more questions about critical illness insurance? Here are answers to some frequently asked questions:

Q: Is critical illness insurance worth it?

A: Yes, critical illness insurance is well worth the premium costs for most Canadians. With rising rates of serious illnesses, your chances of needing to file a claim are quite high. This coverage is crucial to avoid financial devastation.

Q: What is the difference between critical illness and disability insurance?

A: Disability insurance pays if you're too injured or sick to work. Critical illness insurance pays a lump sum when you're diagnosed with specific medical conditions only. While related, they have distinct purposes.

Q: Does critical illness insurance cover pre-existing conditions?

A: Typically not, unless you buy from an insurer like Canada Protection Plan, which offers separate cancer and heart policies. Otherwise, undisclosed pre-existing conditions usually void the policy.

Q: Are critical illness insurance payouts taxable?

A: No. Since critical illness benefits are considered insurance payments, the lump sum payout you receive is tax-free.

Q: How much critical illness insurance should I get?

A: Aim for $100,000 to $300,000 in coverage depending on your income, debts, dependents, and other factors. Your advisor can help determine the right amount.

Q: How does critical illness insurance protect Canadians financially?

A: Critical illness insurance provides Canadians with a tax-free lump sum payment if diagnosed with a covered condition. This can help pay bills, replace lost income, and cover treatment costs not paid for by government healthcare.

Q: What types of costs can the payout from critical illness insurance be used for?

A: The payout can be used flexibly for anything from medical bills, hiring home care, paying off debts, funding accessibility renovations, replacing lost wages, and more based on your needs.

Q: Where can Canadians purchase individual critical illness insurance policies?

A: Individual critical illness policies can be purchased directly from major insurance companies like Sun Life, Manulife, and RBC or through an insurance advisor. Some professional associations also offer group plans.

Q: Why is critical illness insurance worthwhile for Canadians despite public health care?

A: It provides funds to cover health costs not paid by provincial health care and protects Canadians from loss of income and financial hardship, making it a valuable supplement.

Q: When should Canadians consider purchasing critical illness insurance?

A: It's ideal to apply when young and healthy, as premiums rise significantly with age. Canadians with risk factors like a family history of illness should apply early.

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