What is critical illness insurance?

What is critical illness insurance and is it something you should have in your life plan?

Did you know:

  • 25% of repossessed homes are a result of an illness
  • 1 in 3 people will be diagnosed with cancer
  • 1 in 4 people will suffer from heart disease
  • 3 people in Canada per day are diagnosed with Multiple Sclerosis
  • 80,000 Canadians are diagnosed with Alzheimer’s every year
  • 50,000 Canadians suffer a stroke each year

When I learned about critical illness insurance I was surprised to find out a doctor had actually asked for this product to be developed. Heart Surgeon, Dr. Marius Barnard of South Africa, had this product developed when he recognized the financial impact his patients suffered when they survived a critical illness or heart disease.

In 1983, along with a large insurance company, he helped design this product, which pays out a lump sum of money upon diagnosis of named critical illnesses. Every company, as with most insurance products has slight variations in the insurance product. The main components are that you must survive 30 days from the date of diagnosis by a qualified medical professional. The policy would then pay out a lump sum of money to provide for income, medical expenses, special treatments outside Canada or any other expenses you might incur. Once the lumps sum benefit is paid the premiums and the policy end.

The number of named illness have increased from a heart attack to now cover up to 25 or more critical illnesses. Some also have partial payouts for what they consider early diagnosis. This a list of some of the illnesses covered(policy wording should be reviewed as to what defines the diagnosis of each named illness as per the company used):

  • Alzheimer’s;
  • Aortic Surgery;
  • Aplastic Anemia;
  • Bacterial Meningitis;
  • Benign brain tumor;
  • Blindness;
  • Cancer;
  • Coma;
  • Coronary artery by-pass surgery;
  • Deafness;
  • Heart Attack;
  • Heart Valve Replacement;
  • Kidney Failure
  • Loss of Independent existence;
  • Loss of limbs;
  • Loss of speech;
  • Major organ failure;
  • Major organ transplant;
  • Motor neuron disease;
  • Multiple sclerosis;
  • Occupational HIV;
  • Paralysis;
  • Parkinson’s disease;
  • Severe burns;
  • Stroke.

Think about your family, friends, neighbors, co-workers and in most cases, you will know someone that has had one of these affect their lives. I have noticed in recent years I see more and younger people suffering from these illnesses. It is a good idea to get a policy sooner rather than later in life. If you decide to purchase one of these policies have your advisor or agent review what is and is not covered with you. If you do not understand something to be sure to ask, don’t just walk away and shrug your shoulders if you are not clear on things.

Another piece of advice; don’t get your financial advice from a friend, your doctor, lawyer, dentist or accountant. Many of the people I see become very confused because everyone gives their opinion on these subjects and policies without actually knowing the intricacies of the products or if they fit in your personal life. You don’t see your dentist for your legal advice, so use the professional trained in the products to find what is best for you.

Critical illness policies are becoming a much needed and valuable piece in financial plans. Now that the basics have been explained my hope is that if you don’t have a policy, you will see someone and get a policy in place if you qualify still.

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