Critical illness insurance (C.I) is a form of health insurance that provides a lump sum amount against illnesses such as heart attack, stroke and cancer. Heart disease, stroke and cancer are one of the most common health issues that individuals might face. According to Cancer Society, 1 out of every 2 Canadians will be diagnosed with cancer during their lifetime. Medical advancements have improved overall life expectancy and health but you never know when the worst could happen. It’s important to be covered!
Policy Overview
Critical Illness (CI) insurance will pay a one-time tax free benefit to the life insured, provided that they survive the minimum waiting period. The minimum waiting period can vary but it is usually 30 to 90 days after diagnosis. This 30-90 waiting period can be referred to as the “elimination period”. Most policies require that once an individual is diagnosed with a critical illness, they must survive for a specific period of time.
Policy Terms
The term of C.I. insurance can written as renewable term or permanent term. Renewable terms are reset every 10 years, guaranteed renewable to age 65, 70 or 75. A renewable term policy may have a feature that allows the policy holder to convert it to a permanent term insurance, depending on age. Permanent terms are usually set up as term-75 or term-100.
Applying for Critical Illness
When applying for a Critical Illness policy, the insurance company would evaluate your health using a questionnaire. This questionnaire will put emphasis on your family’s health history as well as your own.
Benefit Amount
The benefit of critical illness insurance varies. It could be as small as $10,000 to over $1,000,000. This benefit would be paid out to the policy holder tax free and it’s paid only once. Policy is lapsed once the benefit is paid. This amount received can be used at the policy holder’s discretion.
Critical Illness Insurance Coverage
Coverage of critical illness can either be basic coverage or comprehensive coverage.
Basic Coverage – Basic critical illness coverage covers four illnesses such as:
- Heart Attack
- Stroke
- Coronary Bypass
- Cancer
Comprehensive Coverage – Comprehensive critical illness insurance is more broad and covers various types of health problems. Below is an example of illnesses covered by comprehensive coverage.
- ALS (Lou Gehrig’s Disease)
- Alzheimer’s Disease
- Acquired Brain Injury
- Benign brain tumours
- Bacterial meningitis
- Blindness
- Cancer
- Coma
- Deafness
- Dementia
- Kidney failure
- Loss of limbs
- Loss of speech
- Major organ transplant
- Major organ failure on waiting list
- Motor neuron disease
- Multiple sclerosis
- Occupational HIV infection
- Paralysis
- Parkinson’s disease
- Severe burns
- Stroke