What is Critical Illness Insurance?

Critical Illness Insurance


First conceived of (by Dr. Marius Barnard) and offered in South Africa in 1983, critical illness insurance has expanded to markets throughout the world. Critical illness insurance is part of a larger class of insurance products referred to as living benefits. Living benefits, as the name implies, provide a benefit if the covered person is affected by an insured condition during their lifetime.

Like life insurance, critical illness insurance typically pays a lump sum amount. Unlike life insurance, that would pay to an estate or another person named as a beneficiary, critical illness insurance would ordinarily pay the benefit to the person who has become critically ill by the covered illness. Proceeds of the insurance can be used for any purpose, without any accountability to the insurance company.

Critical illness insurance came about in response to improvements in healthcare. In essence, what would have killed us just a few short decades ago, is often successfully treated, leading to recovery, and often a return to work. This is indisputably a good thing.

A good thing, for sure, but at what cost? It is not uncommon for people to suffer acute financial devastation. The failure of a once successful business. The loss of a home to foreclosure. The evisceration of retirement savings. The financial implications to surviving a critical illness can be a ominous.

Critical illness insurance can be basic, covering against the four big offenders: cancer; heart attack; stroke ; and, coronary bypass surgery, or more comprehensive to include up to 25 conditions, such as: blindness; deafness; dementia; heart valve repair/replacement; kidney failure; loss of limbs; multiple sclerosis; paralysis; Parkinson’s, etc.

Critical illness is typically a little harder to qualify for (than life insurance) as there is more for underwriters to consider, such as, family health issues and life style choices that have a high degree of impact on the likelihood of a claim. And the likelihood of a claim is considerably higher with critical illness as well, so dollar for dollar the premium is a little higher as well.

Whether or not critical illness insurance is something you need, is ultimately up to you. You will want to consider such things as: What purpose would I use the money for? How long might I be off work? Would my spouse take time off to be by my side during recovery? What financial obligations would continue during the time I might be ill? What income would continue or stop during the time I might be ill?

A licensed advisor can help you navigate through all of these matters. What is important at the end of the day, is that the advisor help you to determine what’s best for you and your family, or your business partners, as the case may be.

Here is a short list of how some people have chosen to use the proceeds of critical illness insurance:
– Make payments on mortgage or other debts;
– Hire staff to run a business during their illness;
– Pay for medical treatments;
– Family accompaniment for medical travel;
– Make changes to home or office to accommodate new realities;
– Take family on a much desired trip;
– Address bucket list priorities.

Clearly, critical illness insurance can provide protection against the financial risk associated with critical illness, so you can focus of getting better, instead of financial worries. It can provide funds to cover a year or two or more of earnings, or just some extra cash to get treatment that might otherwise be out of reach, or to check a thing or two off the bucket list.

At Black Edge Advisory you can expect excellent advice and assistance in this regard, backed up by the resources available through one of Canada’s largest MGAs with access to nearly all related products available in the country.