Illness Insurance in Canada
One of the most recent types of financial protection products in Canada, Critical Illness (CI) insurance, provides a lump sum cash benefit to the life insured if he is diagnosed with a serious medical condition covered by the policy. CI insurance is designed to provide financial support to people who live through a major illness and therefore policies typically require the life insured to survive at least 30 days after the diagnosis to receive the insurance proceeds.
Other People Are Reading
-
History
-
Critical Illness insurance was created by a South African doctor named Marius Barnard, brother of Dr. Christian Barnard, who performed the first successful heart transplant operation in history. Dr. Marius Barnard was noticing that several patients suffered dire financial consequences while recuperating from surgery and wanted to develop an insurance policy to support patients before, during and after treatment by providing a lump sum cash benefit paid upon the diagnosis of a critical illness.
Features
-
CI insurance is still mainly marketed as financial protection against cancer, heart attack and stroke. The covered medical conditions common to the majority of products are life-threatening cancer, heart attack, stroke and bypass surgery. More covered conditions get added once in a while. As of 2010, a typical policy can also cover conditions such as Alzheimer's, Parkinson's, major organ failure or transplant, blindness, deafness, loss of speech, multiple sclerosis and paralysis. Even with all of the added covered conditions, CI insurance is still mainly marketed as financial protection against cancer, heart attack and stroke.
-
Types
-
CI insurance is generally available on a Term 10 renewable basis (with coverage ceasing at age 75), as well as Term to age 75 and Term to 100. A popular option to add to the coverage is return of premium (ROP). Although the premium for the coverage is higher, the life insured knows that they will get their money back, including the cost for the ROP option, should they reach age 75 without being diagnosed with one of the covered conditions.
Benefits
-
The CI lump sum benefit is paid out tax-free to the life insured. The CI lump sum benefit is paid out tax-free to the life insured. The life insured does not have to prove any financial burden or show medical bill receipts. The only requirement for receiving the benefit is the diagnosis of one of the covered conditions in the policy contract and surviving to the end of the waiting period.
Significance
-
CI insurance is gaining popularity as more and more people survive the onset of a critical illness. According to the Canadian Cancer Society, based on 2009 incidence rates, 40 percent of Canadian women and 45 percent of men will develop cancer during their lifetimes. However, based on 2002-2004 estimates, 62 percent of people are expected to survive for five years after their cancer diagnosis.
Considerations
-
A woman is less likely to be approved for CI insurance if her mother had breast cancer. CI insurance goes through a stricter underwriting procedure and has higher premiums than life insurance, therefore a good practice is to look for coverage at the earliest age possible, while still in reasonably good health. Family history gets scrutinized intensely during the process. For example, a woman is less likely to be approved for CI insurance if her mother was previously diagnosed with breast cancer.
Availability
-
Critical Illness Insurance in Canada can be obtained from a licensed life insurance agent.
-
References
Resources
- Photo Credit doctor desk image by dinostock from Fotolia.com signing a contract image by William Berry from Fotolia.com canadian dollars bank notes 20 image by Andrei Filonov from Fotolia.com Doctor image by Monika 3 Steps Ahead from Fotolia.com
