Is Critical Illness Insurance Right for You?

It is probably the most disturbing news an individual can receive during a routine checkup: you have a critical illness and you must receive treatment for it.

Thankfully, Canadians have access to healthcare and can receive treatment without spending an arm and a leg out of pocket. But what if the doctor’s orders also require taking a significant leave from work, leading to income loss? Or what if the rare but recommended treatment requires expensive travel to a clinic across the continent or even out of the country?

According to Bankruptcy Canada, getting a serious illness, along with income reduction and job loss are some of the most common reasons Canadians file for bankruptcy. However, Critical Illness Insurance, or commonly called CI, is designed to provide you with tax-free funds to assist you financially in the event that you are diagnosed with a life-threatening illness.

As financial advisors will tell you, CI covers a number of these illnesses and conditions. A comprehensive policy can insure an individual against more than 20 of these ailments. Typically, the tax-free benefit is paid 30 days after diagnosis or surviving an event, such as heart attack or stroke. Some examples of life-threatening illnesses include cancer, benign brain tumor, Parkinson’s disease, ALS, or coronary artery bypass surgery.

But why purchase it now?

As a healthy individual, it is hard to imagine receiving such a life-changing diagnosis; however, it is important to remember that developing a critical illness is very common. For example, according to the Canadian Cancer Society, nearly half of all Canadians will develop cancer over the course of their lives. In 2020 alone, there will be 225,800 new cancer cases and while some of those will not be critical, 83,300 of cancer cases this year will result in death. Other critical illnesses, such as heart disease and stroke, are fairly common occurrences as well.

While these statistics are concerning, advances in medicine and long-term care have increased the survival rates for individuals diagnosed with a critical illness. And according to Statistics Canada, Canadians’ lifespan has increased from 79 to 82 years in the last 20 years. This means that the likelihood for an individual to survive – and thrive – after a serious illness has also increased.

Good news, right?

The reality is that the majority of Canadians are unprepared financially for a life-altering diagnosis. While some Canadians may think they have saved enough money to protect themselves from financial ruin, this may prove not to be the case depending on the type or severity of the illness they were diagnosed with and the lifestyle changes that might be necessary.

This is what world-renown South African physician, Marius Barnard, discovered after treating critically ill patients, many of whom eventually recovered only to find their finances in a state of disarray. Barnard, who assisted his brother Christiaan in performing the world’s first successful open-heart surgery in 1967, also helped develop the world’s first CI policy in 1983 with South African insurance company, Crusader Life.

Barnard travelled the world promoting CI, famously noting that: “People need insurance not only because they are going to die, but because they are going to live.” He also repeatedly noted that patients with little to no financial stress recovered faster and had better health outcomes.

CI can keep you and your family afloat while you recover. It also protects your retirement, covers your daily expenses, and can help with any unforeseen expenses, such as hiring a home care nurse or traveling to a specific hospital or clinic for treatment. This means that an individual with CI can recover from such an illness without worrying about the toll the illness has taken on their financial stability or the financial wellbeing of their family.

Questions? Reach out if you are interested in exploring if critical illness insurance is right for you.

And as always, please feel free to share this article with anyone you think would find it of interest.