Critical Illness Insurance can give you a tax-free payment if you’re diagnosed with a serious condition.

The three main conditions that a Critical Illness Policy covers is:

  • Life Threatening Cancer
  • Heat Attack
  • Stroke

While you may not know someone who has claimed on Critical Illness Insurance, I would bet you know someone who was diagnosed with one of those three conditions during their lifetime.

Let’s focus in on Cancer a bit more – as that is what majority of claims are for. Here is some research for cancer statistics in Canada:

– Between 2015 and 2030, number of new cancer cases is expected to increase by about 40%

– Nearly 1 in 2 Canadians are expected to develop cancer during their lifetime.

– Most cancer cases are for those who are 50+, however it can happen to anyone at any age.

– In 2020, it was estimated that 225,800 Canadian men and women would be diagnosed with Cancer. That’s roughly 618 cases per day.

So, this just shows that the risk is real. Many do get sick, some have insurance, while many don’t. The good news is that survival rates are up, meaning many will beat cancer.

So is Critical Illness worth it?

Well, if you were diagnosed with cancer, I am sure that you would be grateful for the coverage. It can help you pay for things your pay cheque just isn’t designed to handle. Such as, travel for healthcare, treatments that may not be covered (there are some very expensive medications), take a leave from work and focus on recovery. It can allow a loved one to take a leave of absence to be there and support you. It can be used to take a family vacation to create lasting memories if one is terminally ill. You decide to use it however you need.

Depending on the provider you choose there may be other valuable benefits, besides a tax-free payout.  How does access to world-renowned specialists, that can provide a second opinion or help you understand your condition and treatment options sound? Some plans provide even further additional support through access to counselling services, child/home care support services and also legal and/or financial consultations.

How critical is Critical???

The better question may be how important is a financial cushion to you? Some may already have savings that could handle such a blow, whereas others don’t want to jeopardize their retirement savings if they become critically ill.

That all said, Disability Insurance is something that may be even more important. Disability Insurance is designed to replace your income, and your income is likely your most valuable asset. Most never really think about how much they will earn over their lifetime. If you have Group LTD, make sure you understand it and some of the limitations that may come along with it.

Critical Illness is a good supplement to disability insurance; however it rarely can be used to replace an income… $50,000 won’t last you a lifetime if you were permanently disabled.

So once more . . . how critical is Critical? I will leave you with this story taken from a Reddit user, as I feel their words explain much better than I ever could:

“You never think you need it until you do. I was a healthy, marathon running 29 year old.

My critical illness benefit (provided with my work health plan/life insurance) kicked in when a 36,000lb truck hit me while I was cycling.

Even though I was provided LTD while on recovery, depending on your plan, it’s only 70% of your earning at the time of illness. The Critical Illness Benefit paid me out a lump sum that I used to cash flow medical devices and treatments I needed. It’s LIFE CHANGING when you suddenly need to pay for things not covered by OHIP or private insurance.

My best example was that OHIP covered having a VAC machine (and nurse care for the VAC machine) at home for 8 weeks. If you needed the machine longer, you have to pay out of pocket. I ended up with the machine for 11 weeks total, paying around $2500 per week (machine rental, medical supplies, and nurse with VAC training to come and change every 2-3 days).”

Source: Critical Illness Insurance – worth it? : PersonalFinanceCanada (