People buy Critical Insurance to replace income that has stopped as a result of a Critical Illness, and to pay for new expenses that may be incurred as a result of the illness. Critical Illness Insurance is relatively new in Canada. It was invented and first introduced in 1983 in South Africa by Dr. Marius Barnard as a top-up benefit to medical expense policies, and has only recently been available in Canada. Dr. Barnard recognized that many people were recovering from surgeries, that in earlier years would not have been conducted. (His brother Dr. Christian Barnard was a pioneer in heart transplant surgery). The additional life expectancy came with a cost, however, as frequently the patient could not continue to work, and had seriously depleted any savings they may have had to find medical and recovery expenses.
Critical Illness is unlike Disability Insurance, in the following areas:
- Critical Illness Insurance provides a one-time, lump sum, tax-free cash payment, if you suffer a Critical Illness, and survive for 30 days. Disability Insurance pays a portion of your monthly income, until the insurance company decides that you have recovered.
- Your doctor, rather than the insurance company, decides whether you have suffered a Critical Illness.
The amount you pay to buy Critical Illness insurance is called the premium. This amount will vary depending upon:
- The amount of coverage you buy.
- The lump sums available range from $50,000 to $1,500,000.
- The extent of coverage. Some companies offer coverage for more types of Critical Illness than others do.
- The duration of Coverage:
- 10 Year, Age 65, Age 75, or Life.
- Your Age, Gender, Physical Condition and whether or not you smoke.
Critical illness Insurance proceeds are paid directly to you, on a lump sum, tax-free basis, and can be used for any purpose. Commonly used to pay for:
- Debts, Loans & Mortgages
- Alternative Medicine
- Leaves of Absence
- Early Retirement
- Nursing Care
- Home Adaptation
- Occupational Change
- Job Retraining
Critical Illness Insurance Policies cover some or all of the following conditions, depending upon the insurance company selected:
- Severe Burns
- Major Organ Transplants
- Occupational HIV infections
- Motor Neuron Disease
- Benign Brian Tumour
- Aortic Surgery
- Heath Valve Replacement
- Loss of Independence
- Heart Attack
- Coronary Artery Bypass Surgery
- Loss of Speech
- Loss of Limbs
- Kidney Failure
- Parkinson’s Disease
- Multiple Sclerosis
- Life threatening Cancer
It is expected that 80% of Canadian claims will be for Cancer, Heart Attack or Stroke. Key issues to consider when buying Critical Illness Insurance:
- Awareness of Canadian statistics regarding critical illness experience
- Extent of coverage varies by company
- Definitions and Interpretations of critical illness
The purchase of Critical Illness Insurance is complex, and is relatively new in Canada. Hatch & Muir are Chartered Life Underwriters and Certified Financial Planners. We can provide you with advice and help you choose the right Critical Illness insurance contract.