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Critical illness insurance plays a vital role in maintaining your financial stability after being diagnosed with a covered illness, like a life-threatening cancer or heart attack. It pays a one-time tax-free lump sum benefit that you can use to pay for extra medical expenses, replenish your emergency fund, replace lost income, and more.
However, the landscape of critical illness insurance is expansive, with several plan options available. From term policies with a defined coverage period to whole life plans, ensuring lifelong protection, the array of choices can be overwhelming.
In this post, we shed light on the options you have to buy critical illness insurance. By the end, you’ll be equipped with a clearer understanding of the plans available, empowering you to make informed decisions to safeguard yourself and your family.
- Key takeaways:
- Term critical illness insurance is available with guaranteed premiums for 10 or 20 years or until age 65 or 75.
- Whole life critical illness insurance lasts a lifetime, giving you peace of mind that you'll always be covered.
- Other options include the number of covered conditions—25 or four, adult or children policies, or the type of underwriting—fully underwritten or simplified issue.
Term Critical Illness Insurance Coverage
Term policies stand out as Canada’s prevailing form of critical illness insurance. They offer cost-effective coverage tailored for individuals in their younger, healthier years, accommodating constrained budgets from paying other mandatory living expenses like mortgage payments or rent.
Additionally, these policies offer adaptability, allowing you the ability to convert them to a longer-term or whole life policy should your needs evolve in the years ahead.
Let’s take a look at the most common critical illness insurance term policies.
1) Term-10
Looking for the lowest cost critical illness insurance policy? Look no further than term-10, which has a guaranteed premium for the first 10 years of coverage. The guarantees ensure stability throughout this period, prohibiting the insurance company from cancelling the critical illness policy or reducing the coverage amount, regardless of any decline in your health.
Term-10 doesn’t mean the policy expires after 10 years. In fact, you can renew the policy past the 10-year mark, albeit at a higher rate. Some insurers maintain a level rate from years 11 to 20, while others institute an annual increase starting from the 11th year. However, the subsequent higher premiums often become cost-prohibitive, making it advisable to opt for a longer initial term if you intend to retain the policy beyond 10 years.
If renewed continuously, term-10 policies expire at the age of 75. Below is a table showing the monthly premium for the first 10 years of the policy for a coverage amount of $100,000.
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $25 | $25 |
30 | $29 | $28 |
35 | $33 | $34 |
40 | $44 | $46 |
45 | $64 | $63 |
50 | $97 | $86 |
55 | $160 | $133 |
60 | $251 | $184 |
65 | $407 | $279 |
2) Term-20
Term-20 critical illness coverage shares similarities with term-10 but extends the level premium period to 20 years. As a result of this prolonged period of cost stability, the premium for term-20 policies is higher compared to term-10.
It’s an ideal choice for those seeking consistent costs over a two-decade span and have the financial capacity to accommodate the slightly elevated premium. The table below shows the sample monthly cost of term-20 critical illness coverage for male and female applicants of different ages for the first 20 years for $100,000 of lump sum benefit.
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $27 | $27 |
30 | $34 | $35 |
35 | $44 | $46 |
40 | $63 | $61 |
45 | $96 | $88 |
50 | $147 | $125 |
55 | $234 | $179 |
3) Term-65
A term-65 critical illness insurance plan has level premiums until age 65. It comes at a higher cost than term-20 but provides even longer cost stability. This critical illness plan is most suitable for those with a larger budget seeking a level cost until the standard retirement age in Canada. They also have no desire to keep the policy past age 65.
Here is a table showing the monthly cost for $100,000 of tax-free lump sum benefit for term-65:
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $49 | $47 |
30 | $59 | $57 |
35 | $71 | $67 |
40 | $84 | $77 |
45 | $96 | $88 |
50 | $135 | $116 |
4) Term-75
Term-75 stretches the expiry of the term all the way to age 75. It comes at a slightly higher cost than term 65 but covers the period from age 66 to 75 when the likelihood of encountering a serious illness increases significantly compared to younger ages.
Also, most return of premium on expiry riders pay out at age 75, making term-75 the only option if you want this return of premium rider.
The table below shows the monthly premiums for term-75 with a lump sum benefit of $100,000 upon the diagnosis of a covered illness:
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $58 | $55 |
30 | $79 | $68 |
35 | $97 | $83 |
40 | $119 | $106 |
45 | $148 | $132 |
50 | $209 | $157 |
55 | $234 | $174 |
60 | $309 | $220 |
65 | $398 | $286 |
Whole Life Critical Illness Insurance
Beyond term coverage, another significant type of critical illness insurance is whole life policies. These critical illness plans, as implied by the name, remain in effect throughout your lifetime as long as you continue to pay the premium.
It’s crucial to reiterate that the majority of term policies offer the option of conversion to whole life plans without requiring additional medical underwriting evidence. This flexibility means that the initial choice you make is not permanent and can be adjusted based on your evolving needs and circumstances.
5) Term-100
Despite its name, term-100 coverage extends beyond the age of 100. The reason it’s called term-100 is because premium payments end at age 100. While it carries a higher cost than term-75, it offers coverage throughout the late stages of life, when the likelihood of critical illness diagnoses tends to be highest.
Given that an estimated 2 in 5 individuals are projected to receive a cancer diagnosis during their lifetimes, coupled with the fact that 9 in 10 Canadians harbor at least one risk factor for heart conditions, the probability of a payout from a term-100 policy is substantial.
Here is a table showing the monthly cost for a coverage amount of $100,000 term-100 critical illness plans:
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $72 | $70 |
30 | $94 | $88 |
35 | $110 | $110 |
40 | $143 | $125 |
45 | $188 | $166 |
50 | $241 | $219 |
55 | $349 | $273 |
60 | $535 | $376 |
65 | $765 | $539 |
Limited pay term-100
Instead of paying until age 100, wouldn’t it be nice to get it all done in a much shorter period? Some insurance companies offer shorter payment periods of 10, 15, or 20 years, relieving you of the stress of servicing the policy on a fixed income during retirement.
6) 20-pay
A 20-pay term-100 policy requires premium payments over 20 years. Once completed, the policy becomes “paid-up,” indicating that your insurance coverage continues without further premiums due. Although 20-pay policies incur higher costs compared to term-100 due to the shorter payment period, they represent the most economical option among limited pay plans.
20-pay policies are popular for insuring children because they attain paid-up status by the time these young ones reach adulthood. This allows parents or guardians to transfer the policies to them, serving as a valuable gift that ensures lifelong financial protection.
Below is a table showing the monthly premiums for $100,000 of lump sum benefit for 20-pay term-100 coverage:
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $122 | $113 |
30 | $151 | $138 |
35 | $184 | $174 |
40 | $228 | $202 |
45 | $290 | $256 |
50 | $360 | $316 |
55 | $440 | $349 |
7) 15-pay
The next shortest payment period is 15-pay, meaning the policy is paid up after 15 years. These plans typically carry higher costs than 20-pay policies because of the shorter payment duration, condensing the payment period by five years. Here is a table presenting the monthly costs of 15-pay policies with a $100,000 lump sum payment:
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $160 | $149 |
30 | $199 | $180 |
35 | $249 | $226 |
40 | $293 | $266 |
45 | $362 | $336 |
50 | $438 | $411 |
55 | $624 | $512 |
60 | $812 | $675 |
65 | $1,118 | $855 |
8) 10-pay
The 10-pay policy is designed for a rapid payment schedule, concluding all premiums within a swift 10-year span. While these policies offer quick payment completion, they also represent the most expensive form of critical illness insurance. Typically chosen by affluent individuals aiming to safeguard their assets, these plans provide robust financial protection.
Age | Male non-smoker | Female non-smoker |
|---|---|---|
25 | $239 | $222 |
30 | $280 | $269 |
35 | $370 | $334 |
40 | $420 | $390 |
45 | $561 | $497 |
50 | $706 | $610 |
55 | $852 | $727 |
60 | $1,136 | $918 |
65 | $1,462 | $1,109 |
Number Of Illnesses Covered
Besides the term length, you can also choose the number of illnesses your critical illness policy covers.
9) 25 covered critical illnesses
The majority of insurance providers offer a comprehensive critical illness insurance plan that encompasses coverage for a range of 25 to 26 illnesses. These plans provide broad coverage against various health conditions. These include:
- Acquired brain injury
- Aortic surgery
- Aplastic anaemia
- Bacterial meningitis
- Benign brain tumour
- Blindness
- Coma
- Coronary artery bypass surgery
- Deafness
- Dementia, including Alzheimer’s disease
- Heart attack
- Heart valve replacement or repair
- Kidney failure
- Life-threatening cancer
- Loss of independent existence
- Loss of limbs
- Loss of speech
- Major organ failure on waiting list
- Major organ transplant
- Motor neuron disease
- Multiple sclerosis
- Occupational HIV infection
- Paralysis
- Parkinson’s disease and specified atypical Parkinsonian disorders
- Severe burns
- Stroke
10) 4 covered critical illnesses
If you only want coverage for the big four critical illnesses—life-threatening cancer, heart attack, stroke, and coronary artery bypass surgery—some insurers provide affordable coverage for these, which constitute the majority of claims. These policies typically cost 15% to 30% less than broader coverage plans encompassing 25 illnesses.
Adult Or Child Critical Illness Policies
11) Adult critical illness insurance policy
Individuals aged between 18 and 65 have the option to purchase adult critical illness insurance. Within this range, you can select from various term lengths or opt for a whole life critical illness plan.
Beyond the choice between term and whole life, weighing the coverage amount is crucial. Ensuring the right policy means having a large enough lump sum benefit when you need it the most.
12) Child or juvenile critical illness insurance coverage
While the financial consequences of a critical illness diagnosis for a parent or guardian are substantial, it is equally important not to underestimate the financial impact if it were to occur to a child.
When a child falls ill, parents may need to take extended leaves or even resign from their employment to care for their sick child, resulting in a loss of income. Moreover, medical expenses can swiftly deplete savings.
Therefore, parents should consider the merits of obtaining critical illness insurance coverage for their children, as eligibility for coverage begins as early as 30 days old and extends up to 17 years old.
A notable distinction between child and adult policies lies in the coverage of additional childhood illnesses. These include:
- Cerebral palsy
- Congenital heart disease
- Cystic fibrosis
- Muscular dystrophy
- Type 1 diabetes mellitus
Type Of Underwriting
The primary goal of underwriting is to assess the level of risk you pose to the insurance company. Based on this evaluation, the insurer determines the premium rates, coverage limits, and other terms of the critical illness insurance policy. People with higher perceived risks may face higher premiums or, in some cases, may be denied coverage.
13) Fully underwritten
The majority of critical illness insurance plans involve a comprehensive underwriting process. This entails the insurance company thoroughly evaluating your risk profile by assessing your medical history, health status, and lifestyle before extending critical illness coverage.
As part of this process, you might be required to undergo a medical examination comprising blood tests, urine samples, blood pressure readings, and other assessments. Additionally, the insurer may seek a detailed report from your family doctor to gain further insights into any pre-existing medical conditions you may have.
Typically, because of the thorough underwriting process, fully underwritten plans might take several weeks to a month or more from the application submission to the issuance of the critical illness policy.
Yet, these meticulously assessed plans offer the best security by covering the most critical illnesses. Moreover, they often feature the most robust definitions for each covered condition, making them the most reliable policies available.
14) Simplified issue
Simplified issue plans, as the name suggests, don’t demand extensive underwriting procedures. Instead, a straightforward questionnaire suffices. No medical exams or reports from your family doctor about your medical history are required by the insurance company.
Due to this streamlined process, critical illness policies under simplified issue plans are issued far more swiftly compared to fully underwritten ones. However, since the insurer gathers less information about you, there’s an inherent element of uncertainty. Consequently, simplified issue plans typically come at a higher cost than fully underwritten ones to accommodate the increased risk assumed by the insurance company.
Which Type Of Critical Illness Insurance Policy Is Right For You?
Navigating the landscape of critical illness insurance involves understanding the nuanced choices available. From term policies offering cost-effective coverage to whole life plans providing lifetime protection, each type has unique features catering to distinct needs.
As you research your choices, it’s crucial to recognize that the right policy extends beyond the terms and premiums. It encompasses thoughtful considerations of coverage amounts, underwriting processes, and individual circumstances.
If you need assistance in identifying the best critical illness insurance policy tailored to your specific requirements, we are here to help. Feel free to reach out to us at info@briansoinsurance.com or 604-928-1628.
We are committed to providing you with a free, no-obligation consultation. During this session, we can discuss your individual needs, answer any questions you may have, and guide you through the process of selecting a policy that aligns with your financial goals and concerns. Your peace of mind is our priority, and we are ready to assist you in securing the right protection for your future.
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.
