A Life insurance policy with critical illness coverage provides a lump-sum payment to policyholders who survive one of the critical illnesses listed in the policy.

1 out of 3 Canadians will be diagnosed with some form of critical illness. Critical Illness is a defined disease or illness in a state in which death is possible or imminent.

The initial sign you are experiencing a critical illness is when you get rushed to the hospital and admitted into an intensive care unit and placed on life support because of complications of a severe illness that manifests itself in one or more of the following conditions;

Heart attack
Stroke
Respiratory complications
Infectious disease such as a rash
pneumonia

The common denominator in all these emergency conditions you are being hospitalized for a while and if the prognosis worsens your hospital stay will increase and/or you succumb to your critical illness and die.

Critical illness insurance provides for a lump sum payment after a survival period beyond 30 days based upon the confirmed diagnosis of a listed critical illness in the policy a tax free benefits is paid to the survivor to help offset any costs associated with that specific illness during his/her recovery period.

There are up to a maximum of 26 defined illnesses that could be listed depending upon the type of policy you choose

Q: Who decides how much money is to be paid out?

A: The policy owner determines the lump-sum tax-free benefit that would be paid out.

Q: How is the monthly premium determined?

A: The premium is determined by several factors

• Age

• Gender

• Smoker

• Family history

• State of health

• Amount of lump sum

Q: What type of critical illnesses are covered in a policy in general?

A: The number of critical illnesses listed in a policy depends on the type of policy you purchase. In a comprehensive policy, the following 26 illnesses would be covered in

Acquired brain injury
Aortic surgery
Aplastic anemia
Benign brain tumor
Bacterial meningitis
Blindness
Cancer
Coma
Coronary artery bypass surgery
Deafness
Dementia, including Alzheimer's disease
Heart attack and strokes
Heart valve replacement or repair

Kidney failure
Loss of independent existence (LOIE)
Loss of limbs
Loss of speech
Major organ transplant
Major organ failure on a waiting list Motor neuron disease
Multiple sclerosis
Occupational HIV infection
Paralysis
Parkinson's disease and specified atypical parkinsonian disorders
Severe burns

Cancer, Heart Attack, and Stroke are the most frequent type of critical illness claims accounting for over 85% of all claims in Canada.

Cancer and Cardiac coverage are frequently combined as a stand-alone policy excluding all other coverages and issued without a medical examination you just have to answer a few yes/no questions. You must answer No to all questions if Yes the application is declined.

Critical illness is not a substitute or replacement for disability, rather a complimentary tax-free benefit that helps supplement a person’s disability income during those first few months of his/her recovery.

Critical illness benefits show up in various employee benefits plans in other instances as a term rider in Life insurance and/or a stand-alone policy.

Critical Illness Insurance and Long-term Care benefits

Critical Illness benefits are used to pay for Long term care facilities and home care assistance as well offering an alternative to Long-term Care insurance.

Very few insurers today provide for Long Term Care insurance which would virtually do the same thing as a critical illness policy whereupon the diagnosis of loss of independent living or dementia the insured would receive a tax-free lump sum payment to go towards the cost of staying at a long-term care facility or provide for home care assistance while remaining in your own home; hospitalization and associated medical expenses could be covered as well.

In the case of Homecare insurance, the duration of the monthly benefit payments is dependent upon a deductible and premiums paid associated with the benefits tied to the Long-term Care policy contract.

Traditional life insurance providers will include a compassionate clause within the policy that will offer to payout up to 50% of the life insurance coverage if the insured is diagnosed as terminal and is expected to die within the same year.

Whole life policies that have dividend cash value and Universal life fund value policies also include a compassionate clause in additional permit tax-free cash withdrawals to support the life insured during a period of critical illness.

Critical Illness & Long term Care

Critical Illness Insurance and Long-term Care benefits

Quote Now

Follow Us