Understanding Critical Illness Insurance
What is critical illness insurance?
Critical illness insurance is a form of health insurance that provides a lump-sum payment should you become critically ill.
What are the types of illnesses covered by critical illness insurance?
Although the illnesses differ from company to company, there are 22 – 25 illnesses covered by most insurance companies, such as:
- cancer
- heart attack
- stroke
- blindness
- Alzheimer's
- multiple sclerosis
- organ transplants
- kidney failure
- paralysis
Coverage can also vary according to the degree of severity of, or conditions associated with, an illness or disease. For example, if you are diagnosed with a type of cancer that is treatable and that results in minimal "down time", you may not be eligible to make a claim.
Coverage cannot be purchased for a pre-existing condition or illness. It is important to read your policy carefully.
In determining your need for critical illness insurance, you should consider benefits that may already be available to you through your employer or any individual policies you already have. Critically illness insurance can be used to supplement a disability policy.
You should also consider your personal circumstances and the added financial strain that could be brought about by dealing with critical illness. Public and private health insurance plans typically do not provide coverage for day-to-day living expenses such as travel to and from treatments, home care, child care or mortgage payments.
The cost of critical illness insurance varies depending on your age, medical condition, the amount of coverage and the insurance company rates at the time of issue. Generally, the younger and healthier you are, the lower the premium (cost).
Before purchasing critical illness insurance, consider your income, financial obligations, dependents, and health care needs.
You can make a claim if a physician, licensed to practice medicine in Canada and specializing in your particular illness, diagnoses you with a critical illness or disease covered by your policy.
Generally, a lump-sum benefit payment will be made to you 30 days after the claim has been approved. There are no restrictions on how you use the money. Once your claim is paid, your critical illness insurance policy ceases.
You can get your entire premiums back if, when you buy the policy, you add the ‘Return of Premium’ rider. This adds approximately 30 – 50% to the cost of the premium. This endorsement is only available up to the age of 50 with most insurance companies.
No. Long-term care insurance provides for personal care on a long-term basis if you need supervision or assistance with daily living activities due to a chronic illness, disabling condition or cognitive impairment.
Long-term care policies generally reimburse, up to a specified limit, the expenses incurred for various types of care, such as nursing home or home health care; or they pay a pre-determined benefit amount on a daily or monthly basis.
No. Disability insurance, also known as “income replacement” insurance, provides a monthly benefit if you become disabled and can no longer perform the normal duties of your work. Generally, the benefit is limited to a percentage of your regular income and ceases once you earn an income or you no longer meet the definition of disability in the contract.
Unlike critical illness insurance which provides the full policy benefit in a lump sum payment on diagnosis of a critical illness, long-term disability policies may have a waiting period from the onset of disability. Unlike critical illness benefits, long-term disability benefits may be affected by other income you receive or by your full recovery from the illness.
Disclaimer
© Critical Illness Ottawa 2009
Coverage cannot be purchased for a pre-existing condition or illness. It is important to read your policy carefully.
Do I need critical illness insurance?
In determining your need for critical illness insurance, you should consider benefits that may already be available to you through your employer or any individual policies you already have. Critically illness insurance can be used to supplement a disability policy.
You should also consider your personal circumstances and the added financial strain that could be brought about by dealing with critical illness. Public and private health insurance plans typically do not provide coverage for day-to-day living expenses such as travel to and from treatments, home care, child care or mortgage payments.
How much does it cost?
The cost of critical illness insurance varies depending on your age, medical condition, the amount of coverage and the insurance company rates at the time of issue. Generally, the younger and healthier you are, the lower the premium (cost).
Before purchasing critical illness insurance, consider your income, financial obligations, dependents, and health care needs.
How can I make a claim?
You can make a claim if a physician, licensed to practice medicine in Canada and specializing in your particular illness, diagnoses you with a critical illness or disease covered by your policy.
If my claim is approved, when will I receive payment?
Generally, a lump-sum benefit payment will be made to you 30 days after the claim has been approved. There are no restrictions on how you use the money. Once your claim is paid, your critical illness insurance policy ceases.
What if I never make a claim?
You can get your entire premiums back if, when you buy the policy, you add the ‘Return of Premium’ rider. This adds approximately 30 – 50% to the cost of the premium. This endorsement is only available up to the age of 50 with most insurance companies.
Is long-term care insurance the same as critical illness insurance?
No. Long-term care insurance provides for personal care on a long-term basis if you need supervision or assistance with daily living activities due to a chronic illness, disabling condition or cognitive impairment.
Long-term care policies generally reimburse, up to a specified limit, the expenses incurred for various types of care, such as nursing home or home health care; or they pay a pre-determined benefit amount on a daily or monthly basis.
Is disability insurance the same as critical illness insurance?
No. Disability insurance, also known as “income replacement” insurance, provides a monthly benefit if you become disabled and can no longer perform the normal duties of your work. Generally, the benefit is limited to a percentage of your regular income and ceases once you earn an income or you no longer meet the definition of disability in the contract.
Unlike critical illness insurance which provides the full policy benefit in a lump sum payment on diagnosis of a critical illness, long-term disability policies may have a waiting period from the onset of disability. Unlike critical illness benefits, long-term disability benefits may be affected by other income you receive or by your full recovery from the illness.