Critical Illness Insurance provides a lump sum payment – a living benefit – if you are diagnosed with a specified covered illness. With critical illness insurance, you can worry less about finances and just focus on getting better.
The purpose of this kind of insurance is to cover costs related to the illness that you have. However, the lump-sum can be spent on anything you want, since there are no restrictions on how you use the money.
The lump-sum received from this insurance can provide relief by helping you with medical care (the Canadian government may not cover all of these expenses), bringing in additional help at home while you’re undergoing treatment, replacing any lost income, and more.
How does critical illness insurance work exactly?
To qualify for critical illness insurance and to determine your premiums, some insurance providers will require you to complete a medical exam. These providers will offer coverage for a range of illnesses which you pay premiums for that you may not want or need to be covered for. While, other insurance providers offer no medical options, and may ask eligibility questions with no medical exam or tests required (this is great news if you don’t like needles!).
After this process, your insurance provider will tell you which policies you qualify for. Usually, critical illness insurance lumps major conditions such as cancer, heart attack and stroke all under one policy. This means you may be ineligible if you had any one of these conditions in the past.
Fortunately, even if you have had a pre-existing condition there are more flexible insurance options on the market that will allow you to decide if you want to be covered for heart disease or cancer, or both. These flexible options can make your premiums much more affordable.
In order to benefit from critical illness insurance, you will need to pay premiums through-out the term of your insurance policy. As long as you pay these premiums then you will receive a lump-sum if faced with a critical illness listed under the policy you qualified for.
However, if you pass away during the survival period, your beneficiary will receive the lump-sum if the insured purchased an optional benefit called a Return of Premium upon Death (ROPD). The survival period is the length of time a person must survive after being diagnosed with a critical illness before making a claim.
Critical Illness Insurance can be an important part of your overall financial planning. However, it is only one piece of the puzzle, it is still advisable to look into purchasing life insurance to fully protect your loved ones.