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When it comes to insuring ourselves and our loved ones, we often ask ourselves: Is it worth it? This is particularly true when it comes to critical illness insurance, which pays out a lump sum if you are diagnosed with a critical illness such as cancer, heart attack, or stroke.
In this post, we will explore the benefits and drawbacks of critical illness insurance and answer the question: Is critical illness insurance worth it?
What Is Critical Illness Insurance?
Critical illness insurance pays you a tax-free lump sum benefit if you are diagnosed with a covered illness and survive.
What does critical illness insurance cover?
Most critical illness insurance policies cover 25 or 26 conditions. These include life-threatening cancer, heart attack, and stroke, which account for most claims. Other illnesses covered include paralysis, multiple sclerosis, and coronary artery bypass surgery.
To receive the benefit, your diagnosis must meet the definition outlined in the insurance policy. Some covered illnesses require you to survive a waiting period, like 30 days before the insurance coverage pays out.
Who needs critical illness insurance?
Unlike disability insurance, which only income-generating individuals can buy, anybody can purchase critical illness insurance. While the most important person to insure is still the breadwinner, you should also consider insuring other family members like the homemaker and children. That’s because even a severe illness on a non-income-earner can have a substantial financial impact on a family.
How much critical illness insurance coverage do you need?
You’ll want to cover medical expenses, lost income, caregiver expenses, travel costs for out-of-country medical care, and home modifications for accessibility. These are just a few of the additional costs that come with a critical illness diagnosis. On average, people get between $50,000 to $200,000 of coverage.
Ensuring you have enough coverage will get you out of a challenging financial situation during a time when recovery should be your primary focus, not money.
Why is critical illness insurance so important?
A serious illness such as cancer, heart attack, stroke, or organ failure can significantly impact your life, not just physically but also financially. You will have additional medical expenses and may also need to take time off work to get treatment, further jeopardizing your financial condition.
Statistics also show 2 in 5 Canadians will be diagnosed with cancer in their lifetime. Also, 9 in 10 Canadians have at least one risk factor for heart attacks and stroke. As you can see, critical illnesses can happen to anyone, even healthy people.
A critical illness insurance policy creates a financial safety net for you and your family. It will allow you to pay for the expenses in the previous section and put you in control of the situation should you fall ill. This is why critical illness insurance is so important.
What are the drawbacks of critical illness insurance?
One of the main drawbacks is that it doesn’t cover every type of major sickness. The only illnesses covered are the ones listed in the policy, so you may not get a payout even if you fall seriously ill if your ailment doesn’t meet the definition of a covered illness.
Is It Worth Having Critical Illness Insurance In Canada?
To answer whether something is ‘worth it’, you have to weigh the benefits and costs. But most importantly, it should align with your values and objectives. Let’s go through some steps to determine if critical illness insurance is worth it for you.
1. Define your insurance objectives
The primary objective of obtaining critical illness coverage is to prevent the potentially financially devastating impact of a severe illness. An unexpected sickness may set your retirement plan back many years, put you at risk of defaulting on your mortgage and other loans, or otherwise worsen your financial situation.
Buying a critical illness policy transfers this risk to the insurance company. Therefore, it helps you achieve your objective of protecting yourself and your family should you become severely ill.
2. Consider the costs
How much does critical illness insurance cost? Several factors affect critical illness insurance premiums, including your age, gender, smoking status, coverage amount, and optional riders. Below is a table showing the monthly premiums for male and female non-smokers buying $100,000 of term-10 coverage. Term-10 means premiums won’t change for 10 years and is the lowest-cost coverage you can get.
Age | Male | Female |
|---|---|---|
25 | $24 | $25 |
30 | $27 | $28 |
35 | $32 | $33 |
40 | $43 | $52 |
45 | $64 | $63 |
50 | $107 | $94 |
55 | $175 | $143 |
60 | $314 | $221 |
As you can see, the older you are when you buy critical illness insurance, the more it costs. Men also have higher premiums than women as they age. Qualifying for critical illness coverage may also be more difficult as you age and have more health issues. Therefore, it makes sense to get critical illness insurance coverage while you’re young and healthy.
3. Evaluate the benefits
The main benefit of critical illness coverage is the financial flexibility it provides if you fall ill. You can use the tax-free cash payout to pay for out-of-pocket medical costs, modify your home to improve accessibility, or allow your partner to take an extended leave from work to care for you. In essence, you can use the benefit however you see fit.
4. Compare alternatives
What if you didn’t have critical illness coverage? Imagine the alternatives, like raiding your retirement funds, getting a loan, borrowing from family and friends, or starting a GoFundMe to raise money. None of these options are particularly appealing. They’re also more reactive than proactive, leaving your destiny in other people’s hands.
5. Consider your values and priorities
Many Canadians point to health, finances, and family as three of the most valuable things in life. Therefore, protecting these things is of the utmost importance.
Along with life, disability and health insurance, critical illness insurance rounds out the coverages you need to protect your health, finance, and family in case of the unexpected.
Is critical illness insurance worth it?
After going through the steps above, do you think critical illness insurance is worth getting? If you’re worried about how you can financially support yourself and your family if you become critically ill, then the small cost of the policy is well worth the peace of mind it provides.
However, suppose you have sufficient savings that can get you through a period of additional expenses and income interruption without affecting your retirement plans. In that case, you may decide the cost of a critical illness policy isn’t worth it.
Ultimately, whether you should get critical illness insurance depends on your circumstances.
Which should you get: critical illness or disability insurance?
Disability insurance covers lost income if you can’t work due to an injury or illness. On the other hand, critical illness insurance pays out if you’re diagnosed with a disease covered by the policy.
While these may sound similar and overlap each other slightly, they serve different purposes. Critical illness insurance gives you a cash injection at the beginning of your diagnosis, while disability insurance provides ongoing income replacement if your ailment is long-term or permanent.
Therefore, they both work hand in hand to offer you the best protection against the unforeseen. Also, you should remember that you can’t get disability insurance if you don’t earn an income, so critical illness insurance is ideal for homemakers and children.
Get A Critical Illness Insurance Quote Today
If you’ve decided critical illness insurance is worth it, it’s time to get covered. The peace of mind that comes with knowing you are financially protected in the event of a severe illness is invaluable. Don’t wait until it’s too late to take action.
We work with the top insurance companies in Canada to provide our clients with the best coverage options. Our partner companies include well-known and respected names in the insurance industry, such as Canada Life, Desjardins, Manulife, and many more.
These companies offer a range of critical illness insurance plans to suit different needs and budgets, including comprehensive plans that provide robust coverage and narrower policies that focus on specific illnesses.
To get started, scroll down and fill out a quick form to receive personalized quotes in your inbox. We will shop the market, help you navigate the process, and find the right critical illness insurance plan for you. Alternatively, you can reach us at info@briansoinsurance.com or 604-928-1628 for a no-obligation consultation.
Remember, the cost of treatment for a serious illness can be astronomical, and the financial burden can be overwhelming. Don’t leave yourself and your family vulnerable. Take action today and protect your financial future with critical illness insurance.
Get Your Critical Illness Insurance Quote Now
While we make every effort to keep our site updated, please be aware that timely information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Brian So Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser. This post is a brief summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details which can be provided upon request. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders.
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