Critical Illness Insurance: What you need to know

What is critical illness insurance?

Critical illness insurance helps to provide financial support for you and your loved ones, should you be diagnosed with a serious condition. It also has the advantage of saving you additional stress if, for instance, you need to extend your leave from work, while undergoing treatment or recovering from surgery. 

What is a critical illness?

A critical illness generally refers to a condition that impacts daily life, lasts over time, and has serious implications for the quality of life of the person afflicted and their loved ones. It also includes conditions that may result in death. The most common or well-known critical illnesses are: heart attacks, various forms and stages of cancer (breast, prostate, intestine, etc.), strokes, and neurological conditions (Alzheimer’s, Parkinson’s, etc.).

Good to know: CAA Critical Illness Insurance, backed by Securian Canada, covers up to 44 critical illnesses.

Who should be covered by critical illness insurance?

Critical illness insurance might be beneficial for you if:

• You have dependents (spouse or children).
• You have domestic responsibilities such as looking after children that you wouldn’t be able to perform if you were diagnosed with an illness.
• You don’t have health insurance beyond the provincial coverage.
• You have limited savings for unexpected expenses.
• You have a family history of critical illnesses.

The reality is that a significant number of Canadians will be diagnosed with a critical illness at some point in their lives. Furthermore, nearly 10% of Canadians aged 20 or over suffers from a heart condition. Not to mention that the RAMQ public plan and group insurance plans have their limitations, and don’t cover everything! For example, you may be unable to work during your convalescence, and you may need additional specific treatments. In other words, since no one can say what the future holds, critical illness insurance can be very useful.

How much does critical illness insurance cost?

The cost of critical illness insurance depends on several factors:

Age: The older you are, the higher the premiums, since there is a greater risk of suffering from a severe condition as you get older. Many insurers even set age limitations for the coverage of certain health conditions.

Tip: Purchase early and opt for a long-term contract.

Gender: It’s a fact, men usually pay higher rates for critical illness insurance, as they are statistically more likely to suffer from critical illnesses. Indeed, men are twice as likely as women to suffer a heart attack. 

Risk factors: Unsurprisingly, smokers will be charged a higher premium, as their risk of developing a critical illness is higher. Your family medical history may also be factored in.

Good to know: You might be required to complete a medical questionnaire or even undergo a medical examination, but this is not always the case.

Amount of coverage: You can take out coverage for amounts typically ranging from $10,000 to $1 million, i.e. the amount you’ll receive if you’re diagnosed with a covered illness. 

Duration of coverage: Some policies cover periods ranging from 10 to 30 years, often renewable upon maturity.

Tip: Think about the age you’ll be when your policy comes up for renewal. It may be more worthwhile to invest now, rather than risk a higher premium because you will be older at that point.

CAA-Quebec members enjoy exclusive i savings on health and dental insurance, term life insurance, as well as critical illness insurance.

How to determine the amount of coverage needed for critical illness insurance?

You need to take into account your income and your financial responsibilities: mortgage or other loans, schooling for your children, medications not covered by RAMQ, etc. Make sure the amount covers at least 6 months of your salary. Once your insurance has been approved, you’ll sign your contract, and your policy will be active for as long as you pay for it. The number and amount of instalments will be set at the time of purchase.  

How does critical illness insurance coverage work?

If you are diagnosed with a covered illness (as per the definitions provided in your contract), you can file a claim. Be aware, however, that a waiting period of varying length is generally involved, hence the importance of being well informed. Good to know: CAA Critical Illness Insurance, backed by Securian Canada, imposes no waiting period for 25 of the 44 conditions covered. 

If your illness is covered by your insurance and you meet all the criteria, you may receive a lump-sum payment, free of tax. Your coverage will end when your benefit is paid. Good to know: There are no restrictions on what you can do with any benefits you receive. You could, for example, pay for childcare to allow yourself some respite, settle medical bills, pay your mortgage or even set off on a trip while you’re still in shape. This money belongs to you!

On a final note, it’s important to bear in mind that critical illness insurance policies can vary significantly in terms of coverage terms. Do not hesitate to request multiple quotes and compare them before deciding on your own. As with any insurance coverage, carefully read the fine print before signing your policy, and make sure you understand the terms, conditions, and exclusions. If needed, feel free to ask an advisor any questions you may have.