Critical Illness Insurance: Is it Worth the Cost?


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In This Article

Is critical illness insurance worth it in Canada?

For the average Canadian family, critical illness insurance is worth it because the tax-free lump sum payment you would get would offset additional expenses and provide financial security during a tough time.

Do you need critical illness insurance?

You likely need critical illness insurance to financially protect you and your family, in the event that you get sick. It is a tool to help cushion the financial impact a life-threatening diagnosis can have on your income.

Ask yourself: 

  • If you were unable to work due to an illness or condition, would you be able to financially support yourself and your loved ones? Their partner may have needed to take time off work. Or they needed to invest in medical devices, home health care or buy expensive non-insured medications.
  • How many people do you know that have gotten diagnosed with an illness or condition that made it difficult for them to work? Like many Canadians, you may have a close friend or family member who's been diagnosed with a serious illness. You know how emotionally and financially stressful it can be.

You might be thinking: "What are the chances I'll actually develop a critical illness?" Suffering from a serious illness may seem unlikely, especially while you're still young. But it's more common than you think:

is critical illness insurance worth it in canada?

2 in 5 Canadians will experience cancer. Over 10% of hospitalizations in the country are due to heart conditions, stroke and vascular disorders. 1 in 10 Canadians have a neurological disorder, with rates expected to increase.

Critical illness insurance is more affordable than you think. And we cover more conditions than any other Canadian insurer; including coverage for more cardiovascular and cancer conditions.

Need advice from a real human? We've got non-commissioned advisors ready to give you unbiased pointers on getting the right kind of coverage for you:

How much does critical illness insurance cost?

Critical illness insurance can cost around $40 month for a non-smoking 45 year old woman ($50,000 in coverage over a 10 year term).

is critical illness insurance worth it? - cost comparison table

The cost of critical illness insurance depends on the following factors.

  1. Your age: The older you are, the more your premiums are likely to cost. Unfortunately, age plays a major role in how likely you are to suffer from a serious illness.
  2. Your gender: Men and women are more susceptible to different illnesses at different stages in their lives. This will reflect in your premium costs.
  3. Whether you smoke: Smoking is considered a major risk factor for many life-threatening conditions, so expect to pay more for coverage if you can't kick the habit.
  4. The type of plan you choose: Simply put, a larger payout will cost you more. You'll pay a bigger monthly premium if you choose a longer term length and a larger payout amount. Conversely, shorter policies with smaller payouts covering only a few illnesses are more affordable.
  5. Your insurer: Even plans with similar coverage at different insurers can vary widely in monthly premiums. That's why it's essential to shop around and obtain a few quotes before deciding; it could save you a bundle.

Because there are so many variables involved, it isn't easy to give a definite ballpark figure as to how much your critical illness insurance premiums will cost. Generally speaking, critical illness insurance in Canada can cost as little as about $15 a month and up to $100 a month or more.

At PolicyMe, you can buy critical illness coverage on its own or bundled with term life insurance. Applying for both types of insurance coverage takes 20 minutes or less to complete. And you find out if you're approved right away!

For pointers on getting the best insurance coverage for your needs, chat with a non-commissioned advisor. You'll get genuine, honest advice (we'll even tell you if you don't need insurance right now).

What does critical illness insurance cover?

A typical critical illness insurance policy in Canada will cover around 20 serious conditions, including stroke, cancer, organ failure and heart attacks.

Some of these plans will also offer a partial payout for “early-diagnosis” conditions, illnesses where full recovery is likely if it’s caught at an early stage. Trimmed-down critical illness insurance plans will only cover around five illnesses.

Here's a quick rundown of which companies offer the most coverage: 

  • PolicyMe: 44 conditions
  • Sun Life: 34 conditions
  • RBC: 32 conditions
  • Manulife: 31 conditions
  • BMO: 29 conditions

Should you get a critical illness insurance plan with more or less coverage?

The case for more basic critical illness insurance policies is that they have cheaper monthly premiums and are easier to qualify for. But generally a list of fewer conditions are covered.

Based on your risk tolerance, you may find this trade-off worth it. And some protection in place is better than none at all.

On the other hand, you may think that if you’re going to buy critical illness insurance anyway, you may as well pay a slightly more expensive premium for more robust coverage i.e. more conditions covered, both series and early stage conditions.

There are many critical illness insurance plans, so it’s important to review the terms and conditions carefully to ensure they provide the type of protection you’re looking for.

Also be sure to review your policy in detail before you sign it.

What is the difference between life insurance and critical illness insurance?

There are some significant differences between life insurance and critical illness insurance.

is critical illness insurance worth it? vs life insurance
  1. What life insurance is for: Life insurance provides a payout to your beneficiaries after you’ve passed away. Life insurance is designed to help your family maintain their standard of living, pay off any existing debts and meet their financial goals in the case of your unexpected death.
  2. What critical illness insurance is for: Critical illness insurance provides a payout if you’ve been diagnosed with a life-threatening condition that's covered in your policy. The money goes to you, the policyholder, and you can decide how best to use it: to help pay the bills while you’re off work, cover the costs of home care or retrofit your home to accommodate your illness.

Both types of insurance serve as a safety net for you and your family in a worst-case scenario. But they protect against different events.

Having both critical illness and term life insurance can give you the peace of mind you’re looking for, knowing that you and your family are financially protected no matter what.

PolicyMe offers some of the most affordable term life insurance premiums in Canada, and also critical illness insurance covering 44 conditions – more than any other plan in the country – at rates comparable with those at other insurers.

If you’re hit by any of the illnesses covered on our list, we’ll pay out a tax-free lump sum for you and your family so you can worry about your recovery, not your finances.

What's the difference between critical illness insurance and disability insurance?

There are some similarities between critical illness insurance and disability insurance.

Critical illness and disability insurance both protect against an unexpected event by providing a monetary payout. But that’s where the similarities end.

  1. Critical illness insurance issues a one-time payout if you’re afflicted with any illness on their covered list. Anyone can potentially qualify, and most plans will not cover a disability that isn’t life-threatening.
  2. Disability insurance pays a monthly benefit for as long as you cannot work due to a disabling event. You’ll need to be employed or self-employed to qualify and the payments will stop once you return to work.

While there’s some overlap between the two types, critical illness and disability insurance protect against different types of illnesses.

Bottom line: critical illness insurance can protect you in a worst-case scenario

  • Critical illness insurance provides a financial safety net if you’re diagnosed with a life-threatening illness.
  • Monthly premium costs for critical illness insurance can vary based on age, sex, lifestyle, coverage amounts and policy types. You’re likely to find one that’s affordable for you.
  • There are “alternatives” to critical illness insurance, like term life or disability insurance, but they don’t serve the same purpose.

Appendix: Critical illnesses covered by PolicyMe

Here is a look at what the most complete critical illness insurance is in Canada:

critical illness insurance - is it worth it? - complete conditions list

If you’re diagnosed with a critical illness/condition, PolicyMe gives you a lump sum payout to financially help you and your family while you can't work. So that you and your loved ones can focus on what matters most: your recovery. 

FAQ: Critical illness insurance in Canada

How does critical illness insurance work?

If you’re diagnosed with a critical illness that's covered by your plan, you generally have to wait 30 days to submit a claim. This is the industry standard waiting period, but it’s not mandatory at all insurers.

For example, at PolicyMe, there is no waiting period to submit a claim on 57% of the 44 conditions we cover, including all cancers. There is a 30-day waiting period for all cardiac-related conditions.

Coverage amounts range from $5,000 to $1M, which you choose at the time of enrolment. If you are diagnosed with a critical illness covered under your plan, a tax-free lump sum will be paid to you via cheque or deposited in your bank account about a month after your claim is approved.

What happens if you don’t experience a critical illness?

If you have critical illness insurance but never experience a critical illness, consider yourself lucky! Your term will simply expire, and your coverage will end.

However, if you have a “return of premium” rider on your plan, you can request that your premium payments be returned at the end of your policy term. Of course, you will have to pay extra for this benefit, but some people like knowing that a portion of the money they paid into the plan will be refunded if they never make a claim.

Laura McKay

COO & Co-Founder
About the Author

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