Critical illness insurance is an insurance policy which will pay out a tax-free lump sum benefit to you in the event that you suffer a major illness or health condition. Such costs can include the need to make up for lost or reduced income while you were too ill to work (or for your spouse to take care of you), paying for caregivers, modifying or purchasing new cars, houses, or other equipment to support your needs to name but a few. With the Canadian Cancer Society recently reporting that the survival rate for cancer is now over 60%, with many other cancers far exceeding this survival rate, considering how you would cope financially in such a situation has become an important concern for many.

Below are some key features of critical illness insurance policies:

• There is usually a waiting period on the policy (a time by which you must survive your illness following the initial diagnosis) before the policy will pay out. This is usually very short, often between 15 and 30 days.
• The policies usually cover most major illnesses such as serious heart conditions, cancer, strokes, blindness, deafness, paralysis and others. The list of covered conditions can be provide to you by your advisor.
• There are no conditions on how you use the payment – once the lump sum has been paid to you, you are free to use it as it best suits you and your family. It is known as a “living benefit” as the lump sum is paid to you as the policy holder, instead of to a beneficiary.
• In contrast to disability insurance, critical illness insurance is paid even if you are able to return to work following your diagnosis.

Talk to us – we can help determine what makes the most sense in your situation. I would like to explain to you the difference between “renting” and “owning” your critical illness policy and help determine which set-up is right for you.

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