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What you need to know about critical illness insurance in Canada
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A severe health diagnosis can be stressful in more ways than one. The good news is that there is one simple way to take the financial stress out of the mix. How? By securing Critical Illness Insurance in Canada.
But how does critical illness insurance work? What does it cover? And do you really need it?
In this article, we will break down everything you need to know about critical illness insurance so you can decide if it’s the right fit for you.
Critical illness insurance is designed to provide you and your loved ones with financial support in the event you experience a severe health condition. If you’re diagnosed with a covered critical illness, your insurance can provide you with a one-time lump-sum payout, subject to the terms of the critical illness policy, that can be used to cover anything that you and your family might need.
Critical illnesses can come with long-term, ongoing healthcare needs or might require significant time off work to recuperate. Not only is it stressful, but these severe diagnoses can bring a significant financial burden to you and your loved ones. Unlike life insurance, which provides a financial benefit if you pass away, critical illness insurance provides financial support while you’re still alive if you’re diagnosed with a covered illness. This is why the payout is often referred to as a living benefit.
This financial support can help cover anything from medical expenses to lost income, so you can focus on the most important thing—your recovery.
Critical illnesses typically refer to life-altering or severe conditions. They can often be longer-term illnesses and have serious impacts on the lives of those affected. Common critical illnesses that you might be familiar with include heart attacks, strokes, or cancer. In the context of insurance, the critical illnesses that are covered will depend on your critical illness policy. Blue Cross Life’s Critical Illness Insurance covers as many as 44 conditions (27 fully covered and 17 early-stage or partially covered).
Critical illnesses are typically categorized into critical illness and early-stage critical illness. Early-stage critical illnesses are diagnosed earlier and at a less severe stage. They’re usually still included in critical illness insurance because they can have potential longer-term, life-threatening implications. Not all insurers cover early-stage conditions, however, Blue Cross Life Critical Illness Insurance covers 17 early-stage conditions.
Here’s a list of critical illnesses included in Blue Cross Life’s critical illness insurance policy:
We know that critical illness insurance offers financial support if you’re diagnosed with a critical condition. But there’s a lot that happens before you can receive that payout.
To decide if critical illness insurance is for you and to make the most of your coverage, it’s important to understand how it works.
Here’s a step-by-step critical illness insurance guide on how critical illness insurance works in Canada.
The first step with critical illness insurance is to find a policy that fits your needs. Before you start shopping around, you will need to decide a few important things:
You may also be required to answer questions about your medical history or complete a medical exam—although this isn’t always the case.
Once you’re approved for coverage and sign off on your policy, you’ll pay what are known as premiums to your insurance company. You’ll need to stay on top of them to keep your policy active.
These fixed monthly (or yearly) payments are determined when you buy your policy. Everyone’s premiums will look a bit different, depending on your coverage, age, health factors, and more– but more on that below.
With critical illness insurance, your premiums will stay level throughout the entire term. This means you’ll make the same monthly or yearly payments until your policy expires, which makes budgeting for critical illness insurance a breeze.
If you’re fortunate enough to never experience a critical illness during the term of your critical illness insurance policy, it will simply expire, and your coverage will come to an end. If you still want to be insured, you can renew or purchase new coverage depending on your needs.
On the other hand, if you’re diagnosed with a covered condition during the term of your policy, you will be able to file a claim. Once you provide the information needed to your insurance company, this kicks off the process of reviewing your claim and securing your critical illness benefit.
When it comes to making a claim against your critical illness insurance policy, there are some requirements and conditions you have to meet before it can be approved. One common requirement is what’s known as a survival period or waiting period.
The survival period or waiting period is how long you need to wait after being diagnosed with an illness before you can file a claim to receive your critical illness insurance payout.
For example, with Blue Cross Life Critical Illness Insurance, there’s no waiting period after diagnosis for 25 of the 44 covered conditions, so you’re able to submit a claim right away. The remaining covered illnesses have a short waiting period. For example, for cardiac conditions, there’s a 30-day waiting period before you can file your claim.
Critical illness insurance policies are very specific, and every policy is different. So, when purchasing your policy, it’s important to have a clear understanding of any exclusions or limitations. If you need support understanding your policy, a licensed insurance advisor is always a great resource.
If your condition is covered and you meet the terms of your critical illness policy, you’ll receive your tax-free lump-sum critical illness insurance payout.
Despite being tied to a diagnosis, there aren’t any restrictions for how you can use your critical illness insurance benefit. From covering lost income, paying for childcare, paying medical bills, or anything else that will help reduce financial stress during this challenging time—the choice is yours.
Keep in mind that critical illness insurance only provides a one-time payout for most conditions. So, once you make a claim that’s approved and you receive your critical illness benefit, your coverage will end.
Like most types of insurance, critical illness insurance premiums vary from person to person. This means you likely won’t pay the same rate as your neighbor next door.
So, let’s look at some of the factors that influence critical illness insurance premiums.
Unfortunately, the older you are, the more likely you are to experience a severe health issue. As a result, critical illness insurance premiums tend to go up with age.
Men typically pay higher critical illness insurance rates compared to women, as they’re statistically more likely to experience severe illnesses. For example, men are 2x more likely than women to experience a heart attack.
Critical illness insurance is closely tied to your health and wellbeing. So, if medical questions or a medical exam indicate you are at higher risk for a severe health issue, you may find yourself with higher premiums. For example, people who smoke tend to have much higher rates than those who don’t.
Longer critical illness insurance terms will have higher premiums than shorter policies since you’re more likely to experience health issues over a longer period of time.
With that in mind, the slightly higher premiums might be worth it if you expect to need coverage well into the future. Because critical illness insurance tends to cost more as you age, you might end up paying even more come time for renewal.
The smaller your critical illness insurance payout, the lower your premiums will be.
While it’s important to be budget-conscious, it’s equally crucial to make sure that you have enough coverage so you’re financially protected if you do experience a critical illness.
Each insurance company calculates its critical illness insurance premiums a little differently. So, you might see different rates from different companies, even for the exact same coverage.
It’s also important to remember that the covered conditions can vary significantly from one insurance provider to the next. Insurance providers with fewer covered conditions often have lower rates but might leave you vulnerable to other severe health diagnoses.
Make sure to read the fine print so you understand exactly which conditions you’re insured against before signing off on your critical illness policy.
Take the first step towards securing your family's future with Blue Cross Life Critical Illness Insurance. Learn more.
Most Canadians can benefit from having critical illness insurance. We all want to live long and healthy lives. Unfortunately, the reality is that a large number of Canadians will be diagnosed with a critical illness at some point during their life. There’s also a common misconception that all medical costs are covered by provincial healthcare.
Government healthcare and employer-provided health insurance plans can go a long way in getting you the care you need. But with critical illnesses, there are often additional expenses that aren’t covered.
For example, you may not be able to work while in recovery. Or there may be out-of-pocket expenses for home-care, travel, or additional treatment you need to support your recovery.
Here are some reasons critical illness insurance might be a good choice for you:
For most Canadians, critical illness insurance is worth it because it provides extra financial security during an already-stressful time. The benefits of having critical illness insurance include:
See how you can put your mind at ease by securing comprehensive Blue Cross Life Critical Illness Insurance from the comfort of your home. Discover Blue Cross Life Critical Illness Insurance today.
When purchasing your critical illness insurance policy, you’ll be able to choose exactly how much coverage you want and need. Coverage amounts typically range anywhere from $10,000 to $1 million.
You can usually calculate how much critical illness insurance you might want to purchase based on:
No, critical illness insurance is not taxable in Canada. The lump-sum payment that you receive is tax-free. This means that you will not pay taxes on the amount you’ve received as part of your critical illness insurance, and you’ll get to keep 100% of the payout.
Critical illness insurance premiums are also not tax-deductible.
Critical illness insurance protects you and your family by providing a lump-sum payout in the event you’re diagnosed with a covered illness, subject to the terms of the critical illness policy. Critical illness insurance is meant to provide financial support for you and your loved ones during a challenging time when you may not be able to work or tackle your regular responsibilities.
Critical illness insurance coverage can also give you financial confidence, knowing that if anything were to happen to you, you and your family would be taken care of financially.
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Term Life and Critical Illness Insurance products are underwritten by Blue Cross Life and distributed by PolicyMe Corp.
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