Critical Illness Insurance

Current Costs for Cancer Alone

Critical Illness Insurance
By Terri Williams

Here are some very scary statistics: According to the Canadian Cancer Society, 3,200 Canadians are diagnosed with cancer every week. There will be more than 166,000 new cases in Canada this year with over 73,000 people dying of their disease. Based on current rates, 39% of women and 45% of men will develop cancer during their lifetime. Meanwhile, the Heart and Stroke Foundation says a Canadian dies from a heart attack or stroke every seven minutes. Cardiovascular disease accounts for about one third of all deaths in Canada.

We all know that there is nothing more certain in life than death and taxes. Life insurance can protect your family from the financial impact of your untimely death, but what happens if you develop one of these critical diseases and you survive? Life insurance is paid on death, not illness. There are 70,000 heart attacks each year in Canada but only 19,000 of those die. Meanwhile, thousands of Canadians are living through cancer treatments. This is where you may want to talk to your financial advisor about buying critical illness insurance.

Critical illness insurance provides you with a tax free lump sum if you are diagnosed with, and survive, one of a specified list of diseases or afflictions. Different insurance companies will cover different illnesses but the standard four are cancer, coronary bypass surgery, heart attack and stroke. You can usually add other diseases and medical conditions to the policy for additional costs. The lump sum you receive can be used for any purpose. You can reduce your financial commitments such as paying off your mortgage. Or, if necessary the money can help you modify your home or vehicle to help you with mobility issues. You can pay for domestic help during recovery or the money can allow a family member to take time off work to help look after you. If you don’t have a good disability plan at work, you can use the money to replace your income and keep your household going while you recuperate. You could also use the money to access medical services or treatments that are not covered by private or government plans. Or, you could take a trip around the world.

Critical illness insurance is not cheap however. Costs depend on your age and health factors, plus features you may want to add. For example, a policy paying me a $50,000 lump sum payment would cost $49.19 a month for the first ten years of a policy lasting until I was 75. However, the monthly cost would go up every ten years. (This is called a ten-year renewable plan.) If I bought a policy that leveled my payments until I was 75 it would cost me $70.83 a month. I could also add another $34.79 per month to take advantage of the insurance company’s premium payback term. If I remain healthy until age 75 I would receive all my premiums back – totaling $34,220.

Critical insurance may be an option to provide you with financial peace of mind when it comes to your future health. Speak to your financial advisor about balancing your peace of mind with your budget and what type of policy might be best for you.

Terri Williams, CFP®, is Vice President, Marketing and Brand Management for DundeeWealth Inc.

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