Critical Illness Insurance – An Often-Overlooked Part of Your Financial Plan


Critical illness (CI) insurance is an important part of each person’s financial plan. This type of insurance provides additional coverage for medical emergencies like heart attack, strokes or cancer as these illnesses often incur greater than average medical costs. CI insurance policies pay out a lump sum to the insured to help cover those expenses that are not part of your traditional provincial health insurance coverage.

Being diagnosed with an illness is something that can have a disastrous impact on your personal and family finances. CI insurance provides you with financial assistance so that you can maintain your standard of living and focus on what matters – your recovery.  

At the age of 40, Mary purchased CI on the advice of her financial advisor. Two years later, Mary developed a disease that led to her loosing her hearing. Unable to continue work she lost her job and decided to put her house up for sale. She notified her financial advisor and after 30 days of her diagnosis her advisor showed up at her home with a cheque for $100,000. Mary was relieved and was able to make the necessary adjustments in her life without the short-term worry of how she to cover her immediate day-to-day expenses.

Here are a few benefits of critical illness insurance:

  • Benefits you receive are tax free
  • You can spend the lump sum payment that you receive on anything
  • It helps you cover additional expense caused by your illness (medications, adapted equipment, getting a second opinion from doctors outside of Canada, rehabilitation costs, private medical expenses …etc.)
  • It can also help cover financial commitments if you experience a decrease or loss of income
  • You can use the money to take your family on an all expenses paid vacation to a chosen destination

How does CI insurance work:

  • Most insurance companies offer a basic (3-4 covered conditions) or enhanced converge (25+ conditions).  Basic coverage is for cancer, heart attack and stroke. Enhanced coverage includes but is not limited to blindness, cancer, deafness, kidney failure, loss of independent existence, dementia and Alzheimer’s Disease. This list is not exhaustive, please consult your financial and or insurance advisor for a more comprehensive list.
  • The lump sum tax free payment is made once a diagnosed from one of the covered conditions is confirmed by your doctor and you have survived for 30 days.
  • If the insured is diagnosed with cancer within 90 days of the effective date of the policy, the benefits will not be paid.

This is just a snapshot of a very important part of you overall financial plan that you should explore with your financial advisor as there are more unique features and benefits that can protect you and your family at a time of need.

Written Leric Bishop BComm,. CFP

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