What if you GET A cancer,
heart attack or stroke?
Critical Illness Insurance
after you're diagnosed with a covered condition
Leading critical illness insurance plans cover over 20 serious conditions. If you are diagnosed with a covered critical illness, you get a tax-free, lump sum benefit to use as you wish. If you don’t have a claim, you can get your money back with an optional Return Of Premium option.
How would you use the money?
You decide. Here are some ways:
- Pay down your mortgage
- Afford time off work for you and your partner
- Arrange for additional childcare
- Travel outside Canada to get specialized treatment without waiting
- Cover expenses which provincial and private health plans might exclude, such as
- Experimental life-saving drugs
- Medical equipment
- Home renovations to accommodate a wheelchair
Here’s how a 39 year old used his benefits after a heart attack.
How likely is a critical illness?
The statistics are scary. A 30 year old, has about a one in five chance of becoming critically ill before age 65.
You are more likely to survive than die but will your finances? You can self-insure by using money saved for retirement or by taking a loan against home equity. Critical illness insurance may be cheaper and provide more peace of mind.
What if you already have disability insurance?
Disability (or income replacement) insurance is for disability risk. Critical illness insurance is for morbidity risk. These risks are different, though there may be overlap. For example, if you have a critical illness like cancer, you may be unable to work and qualify for disability benefits too.
Some of both may be better than all of one — or none of either.
What if you already have long term care insurance?
Some critical illness plans also provide benefits for long term care. This may be a more cost effective solution than buying long term care insurance separately. Some critical illness plans can be converted to long term care insurance.
Taxation of benefits
Since you pay your premiums with after-tax dollars, the expectation is that benefits are tax-free.
If your critical illness insurance is owned corporately, the corporation likely receives the benefits tax-free. Unlike life insurance, there isn’t a mechanism like the Capital Dividend Account to pay benefits out of the corporation tax-free. Here is more information:
- Corporate ownership of critical illness insurance (Sun Life, Aug 2017)
Do consult with your tax professional.
Here are videos about critical illness insurance:
- “How do I get my critical illness insurance claim paid?” | Question an Actuary 119
- “What happens to my coverage after a claim?” | Question an Actuary 116
- “Is critical illness insurance on children worthwhile?” | | Question an Actuary 37
- How critical illness insurance helped Mark and Sheila | BMO Insurance
How might critical illness insurance help you?
To find out, reserve a private consultation.