Recent media reports have highlighted the cost of specialized medications and treatments that aren’t covered by provincial health plans, and are generally unavailable except for those with personal savings or private health plans. Have you stopped to consider what would happen to you and your family if you needed expensive treatment or care and did not have readily available cash?
Unfortunately, many of us do not have to look far beyond our circle of family, friends and co-workers to find someone who has suffered a major illness or injury. Recovering from a critical illness can leave one devastated both emotionally and financially. Financial stress can result from the inability to continue working, medical costs not covered through provincial or personal medical insurance plans, or the financial setback to one’s long-term savings strategy.
Fortunately, there are options. More and more Canadians are discovering the value of critical illness insurance, and how it can protect their hard-earned financial resources if they’re diagnosed with a critical illness. This type of insurance is relatively new and allows those who are ill to focus on what’s most important – getting better.
What is Critical Illness Insurance?
Critical illness insurance is designed to provide coverage in the event you are diagnosed with any of the policy’s covered illnesses. A lump-sum benefit is paid for surviving a specific waiting period (usually 30 days) after diagnosis of the first occurrence of a critical illness that is defined in the policy. The most commonly covered conditions are life-threatening cancer, heart attack, stroke and major organ transplant, however most policies cover eighteen or more other illnesses. People are living longer and medical advances now provide the potential for more to survive. One of the greatest values of critical illness insurance is the fact that the choice of how to use the benefit is yours and the funds are advanced tax-free. It can be used to pay for experimental medical treatment, to fund child-care, to pay off debt, or to allow a spouse to take time off work to support you. Another important benefit is to assist in asset preservation. You may already have accumulated substantial savings that could be used to fund your recovery, but is this how you envisioned spending money you’ve worked hard to build for your retirement?
Is Critical Illness Insurance expensive? What if I pay and don’t make a claim?
Critical illness insurance is more expensive than traditional life insurance coverage. However, many companies offer an optional rider that will return your cumulative premiums when the policy expires (typically age 75) if you are fortunate to have avoided any of the policy’s specified illnesses.
A decade or two ago, the chances of surviving major illnesses such as stroke, heart attack or cancer were significantly lower than they are today due to medical advances. Having critical illness insurance in place ensures that if you do fall ill, financial considerations will not compound your worries. Critical illness insurance ensures you are able to focus on getting well and being with your loved ones.
Bev Moir is a financial planner with The Moir Team at ScotiaMcLeod in Toronto. ScotiaMcLeod is a division of Scotia Capital Inc., a member of the Scotiabank Group. Member CIPF.
This article is for information purposes only. It is recommended that individuals consult with a financial or tax advisor before acting on any information contained in this article. The opinions stated are not necessarily those of Scotia Capital or The Bank of Nova Scotia. When discussing Life Insurance Products, ScotiaMcLeod Investment Executives are acting as Life Underwriters representing ScotiaMcLeod Financial Services (Ontario) Inc.
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