Critical illness insurance - Do I need it?
The question of need can only be answered by you. Being fully informed is the best tool you can have as you make your decision.
Ask yourself a few questions:
- Can you afford to shoulder the costs associated with becoming critically ill? Take a look at some of the possible costs and imagine the impact to your savings.
- What would the impact be over the long-term? Would your retirement goals be met if you were to remove, say, $50,000, from your savings plan? Would you have to postpone your retirement by a few years? Probably.
- Consider the effects of financial stress at a time when you should be 100% devoted to recovering from your illness. Do you think removing this stress would be a good thing?
Who becomes critically ill?
The average age of people who make a claim on critical illness insurance is 49*. Are you surprised?.*Source: Munich Reinsurance Co., 2005.
What are the health risks?
Heart disease, stroke and cancer are the leading health issues facing Canadians today:
- 38% of Canadian women and 44% of Canadian men will develop cancer during their lifetimes.1
- It is estimated that there are over 70,000 heart attacks in Canada each year.2
- Every 10 minutes, one person in Canada has a stroke.
But, more Canadians than ever are surviving life-altering illnesses:
- Cancer mortality rates are declining for males at all ages and for females under the age of 70.4
- In recent years, the rate of survival among patients hospitalized for a heart attack has increased to 92%.2
- 80% of Canadians hospitalized for stroke each year leave the hospital alive.5
Sources: 1 Canadian Cancer Society, www.cancer.ca, 2006; 2 Heart and Stroke Foundation, 2001; 3 Heart and Stroke Foundation of Canada, Annual Report 2004; 4 Canadian Cancer Society/National Cancer Institute of Canada: Canadian Cancer Statistics, 2006; 5 Heart and Stroke Foundation, 2002.
Medical advances have dramatically improved life expectancy, but we are all vulnerable to possible illness. Odds are you or someone close to you will experience a medical setback at some point - and survive.
Doesn't disability cover this?
If you're wondering whether disability insurance or extended health care benefits through your employer are enough, it's important to understand exactly what those benefits cover, and for how long. Review your disability policy or your extended health care benefits and compare this with the features of a critical illness insurance plan.
Things you should look for:
- Maximum benefit amounts
- Deductibles and waiting periods
- Employment stability (you can't take benefits with you when you leave your job)
- What percentage of income will be replaced, and for how long?
Make sure you're aware of the potential costs of care and recovery, or the kinds of changes you might have to make to your home or life following an illness. Will your benefits meet your needs, or will you have to rely on savings and investments to bridge any gaps? With this information, you can make an informed choice.