Is Critical Illness Insurance Worth It in Canada?

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By <span>Matthew Roberts</span>
By Matthew Roberts

Updated on January 4, 2024

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By <span>Matthew Roberts</span>
By Matthew Roberts

Updated January 4, 2024

Visit author page

3 minute read

Article Contents
Is Critical Illness Insurance Worth It in Canada

With the rising healthcare costs and the unpredictability of life, critical illness insurance emerges as a beacon of hope, offering financial security when needed. But is it the right choice for you? Let’s delve into the intricacies of critical illness insurance, its pros and cons, differences from life insurance, and other details to help you make an informed decision.

Understanding Critical Illness Insurance

Critical illness insurance offers a lump sum payout upon diagnosis of certain illnesses, aimed at reducing financial stress during difficult times. This enables you to concentrate on healing without monetary worries. Generally, it covers severe conditions such as cancer, heart attacks, strokes, and kidney failure, among many others. Some diseases are usually excluded, one of which is diabetes, which might require a different coverage.

Critical Illness Statistics In Canada

The likelihood of encountering a critical illness is higher than most would like to admit. In Canada, statistics paint a sobering picture: 2 in 5 Canadians will experience cancer in their lifetime, and 1 in 10 hospitalizations in Canada is due to heart conditions, stroke, and vascular disorders. The incidence of end-stage kidney disease in Canada is also on the rise. From 2012 to 2021, there was a 24% increase in new patients undergoing dialysis or receiving a pre-emptive kidney transplant. These numbers suggest that critical illness insurance isn’t just a luxury but a necessity for many.

Cost Considerations of Getting Critical Illness Insurance

One of the primary concerns about critical illness insurance is its cost. It can vary, being more affordable for some and pricier for others. In Canada, the monthly cost for critical illness insurance ranges from around $15 to over $100. The cost of the premiums will vary based on several factors, such as:

  • Age: Similar to how age affects life insurance, critical illness insurance premiums increase with age due to higher illness risk.
  • Gender: Different susceptibility to illnesses in men and women affects premium costs.
  • Smoking Status: Due to the heightened risk of severe health issues, smokers face higher premium costs.
  • Plan Type: Larger payouts and longer terms increase premiums; shorter, limited-coverage plans are more affordable.
  • Insurer Variation: Premiums vary across insurers for similar coverage; comparing quotes is advisable for cost savings.
Factors that influence critical illness insurance premiums

Compared with Other Life Insurance Types

It’s crucial to understand how critical illness insurance differs from other insurance types, like life insurance and disability insurance. Life insurance might be a good option for some people to consider in addition to critical illness insurance as it serves a different purpose. Life insurance results in a payout to your beneficiaries upon your passing, whereas critical illness insurance delivers a payout directly to you when diagnosed with a specified condition. Disability insurance, on the other hand, provides a monthly benefit if you cannot work due to disability, not specifically for critical illnesses.

When Is Critical Illness Insurance Worth It?

Consider critical illness insurance if:

  • You have a family history of critical illness.
  • You’re the primary breadwinner, and your family relies on your income.
  • You have limited savings or emergency funds.
  • You are self-employed or employed in a position without paid sick leave benefits.
  • You want to ensure financial stability without dipping into retirement or education savings.

Pros and Cons of Having a Critical Illness Insurance

Pros:

  • Financial & Family Security: Provides financial security for your family during a critical illness. It covers out-of-pocket medical costs, mortgage payments, and lifestyle maintenance.
  • Peace of Mind: Knowing you and your family are financially protected offers peace of mind.
  • Fixed Premiums: Opt for longer-term policies to ensure stable, non-varying premiums, unlike renewable ones, which may initially be cheaper but increase at renewal.
  • Broad Coverage: Most policies cover up to 26 illnesses, including conditions such as cancer, heart attacks, coronary artery bypass surgery, and strokes.

Cons:

  • Affordability Issues: It’s an additional expense way too expensive for some people.
  • Selective Coverage: Not all illnesses may be covered.
  • Potentially High Premiums: Pre-existing conditions might affect coverage or premiums.
Pros and cons of having a critical illness insurance

Making an Informed Decision: What to Look For 

Before deciding on critical illness insurance, consider your personal and family health history, financial situation, and existing coverage. It’s also essential to read the policy details carefully and understand the covered conditions and terms. When choosing a policy, consider:

  • Simplified Issue Options: Look for policies with easy online application processes and instant approval.
  • Premium Flexibility: Seek options like limited pay or return of premium to manage financial impact.
  • Illness Coverage: Ensure coverage for a broad range of illnesses.
  • Coverage Amounts: Policies vary in coverage limits, ranging from $10,000 to millions.
  • Child Coverage: Check for optional riders that extend coverage to children.
  • Partial Payouts: Some policies offer partial benefits for less severe conditions.

The Bottom Line

In summary, critical illness insurance can be an important component in your financial planning strategy, especially in Canada, where the prevalence of critical illnesses is significant. It offers financial relief and peace of mind, allowing you to focus on what’s truly important – your health and recovery. When making any financial choice, it’s important to balance the advantages and disadvantages and consider your specific circumstances to decide if critical illness insurance suits you.

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