Is critical illness insurance worth it?

The best time to plan for the unexpected is when you’re healthy. Why? Because if you become ill, your options are more limited.

Let’s say your doctor diagnoses you with cancer. They say your chances of overcoming it are good. But the weeks of treatment and recovery may come at a high price. Not just physically and emotionally, but financially too. While provincial health care may cover your treatment, you’ll likely have additional expenses. Where will the money come from? You could raid your savings, rack up credit card debt, or borrow against the value of your home. But these options could disrupt your retirement plans.

Critical illness insurance can help.

What are your chances of getting seriously ill?

The chances of being diagnosed with a serious illness could be high. In 2020:

• The Canadian Cancer Society reported that 617 Canadians were diagnosed with cancer every day, and
• The Heart and Stroke Foundation said 35,000 cardiac arrests and 62,00 strokes happen each year.

However, the good news is, medical advances mean that more Canadians are surviving life-altering illnesses than ever before.

What are the costs of being ill?

Having a serious illness can become pricey. You’ll likely face expenses not covered by your provincial health insurance or employer health benefits.

The Canadian Cancer Society found that many patients incur substantial out-of-pocket expenses for their:

• Care
• Travel and accommodations
• Drugs
• Increased childcare costs for some
• Lost work wages (especially for those who don’t have disability payments)

So, if you become seriously ill, having critical illness insurance can help pay these and other expenses. It can ultimately help you prevent financial stress. Because being sick is stressful enough.

Who needs critical illness insurance?

To figure out if you may need this insurance, ask yourself:

• Can I still meet my financial obligations and goals if I have to pay medical expenses?
• Can I afford the loss of income and costs that can happen with a serious illness?

If you answered ‘no’ to either of these questions, chances are, you should consider critical illness insurance. It may be just what you need to help protect you and your family.

If you have disability insurance or employee benefits through work, it’s important to understand exactly what those cover. And for how long. Then, review and compare them with the features of critical illness insurance. Compare things like:

• Maximum benefit amounts
• Deductibles and waiting periods
• Employment requirements (e.g. you can't take benefits with you when you leave your job)
• Percentage of income replaced, and for how long

Depending on what coverage you have, you may need more critical illness insurance to fill the gap.

How much does it cost?

The price you pay for your insurance premiums* will depend on:

• The type of plan you choose,
• The payment period you choose, and
• Factors like your assigned sex, age, smoking status, and medical history.

For example, a Term 10 policy for a non-smoking, 35-year-old woman could cost about $32.40 per month. For a man of the same age, it’s closer to $32.13 per month. Then, the person who becomes seriously ill with one of the covered illnesses will receive $100,000.

* Premiums are the annual or monthly fees you pay for having insurance. Critical illness insurance premiums are guaranteed as shown in your policy.

Is critical illness worth it in Canada?

For most Canadians, critical illness insurance is worth it because it provides financial protection and peace of mind in the face of serious health challenges. As noted above, the main benefits include medical and out-of-pocket expense coverage and income protection. Critical illness insurance also complements other types of insurance.

Here are some additional benefits:

1. Flexibility: The lump sum payment can be used however you see fit. This could be for medical expenses, debt repayment, or maintaining your quality of life.
2. Self-employed individuals: If you're self-employed and don't have employer-provided benefits, critical illness insurance can be particularly valuable.
3. Childcare costs: For parents, a critical illness can lead to increased childcare expenses. Whether you need full-time care while undergoing treatment or additional support during recovery, critical illness insurance can help cover these costs.