Is Critical Illness Insurance Worth It in Canada?

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Article Contents
Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated on June 18, 2024

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Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated June 18, 2024

Visit author page

6 minute read

Article Contents

Critical illness insurance is worth it in Canada, depending on your financial situation, medical history, and whether or not you have dependents.

It can offer a safety net when you’ve been diagnosed with a serious medical condition, helping you provide for your loved ones while you focus on recovering. However, it can also be too expensive for some people to get, especially those who are older or have pre-existing conditions.

Critical Illness Insurance at a Glance

  • Critical illness insurance may be a good idea if you have a family history of critical illness or if you’re a primary breadwinner and want to secure your dependents’ financial future.
  • Its coverage is broad but limited, as not all diseases will be covered.
  • It’s a supplementary type of insurance that can cover gaps in your existing life or health insurance. Consider getting this if it’s within your budget and you’re concerned about the financial burden of being diagnosed with a grave medical issue.

Are you planning to get critical illness insurance? Keep reading to learn if you should purchase it, what it covers, and what may affect its cost.

Critical Illness Insurance Explained

Critical illness insurance (a.k.a. critical care insurance) is a type of insurance that pays you a benefit if you’re later diagnosed with a covered serious illness. This benefit is tax-free and typically a lump sum, and is meant to reduce the financial stress of these illnesses.

Note that critical illness insurance is a supplementary type of insurance that addresses the gaps in your existing health or life insurance coverage. This is because while life insurance gives a payout to your dependents only upon your passing, critical illness pays out your benefit directly when you’re diagnosed with a specific health issue.

These are just some of the costs that can be covered by a critical care policy’s payment:

  • Medical expenses not covered by government health insurance, such as out-of-pocket treatments, therapy, and certain medications
  • Lost income from inability to work
  • Home care and accessibility modifications
  • Childcare and other daily living expenses
  • Travel and accommodations for medical care

Is Critical Illness Insurance Worth It?

Critical illness insurance can be a big help with expenses if you get diagnosed with an acute medical concern. In 2021, 45% of Canadians were found to be living with at least one major chronic disease. With the rising cost of health care, that’s a large chunk of the population that needs extra financial support – something that critical care illness can provide and help you prepare for.

However, critical illness insurance is not always the best solution for your financial situation or coverage needs. Here, we dive deeper into this insurance type’s pros and cons:

These are the main benefits of critical illness insurance:

  • Financial safety net: The lump-sum benefit can cover costs such as daily living costs, out-of-pocket medical bills, and lost income, so you have financial support while you recover and focus on managing your condition.
  • Fixed premiums: Choosing longer-term critical care policies instead of short-term renewable ones will ensure stable, non-varying premiums. This makes it easier to budget and plan for the future.
  • Broad coverage: Critical illness insurance covers a range of conditions, with many providers covering up to 26 serious illnesses such as cancer and heart valve replacement.

Here are the disadvantages you should be aware of before getting critical illness insurance:

  • Selective coverage: Insurance providers don’t cover every serious illness. This can leave you with a coverage gap if you’re diagnosed with a condition that isn’t listed in your critical illness policy. For example, diabetes is generally excluded from critical illness insurance and will need special coverage. Consider combining life insurance with critical illness insurance to further increase your financial protection.
  • Costly premiums: Critical illness insurance can be expensive, especially if you’re an older applicant or have a pre-existing medical condition. This can make it tricky to find the coverage you need.

What Does Critical Illness Insurance Cover?

The specific medical conditions considered as “critical illnesses” vary from insurer to insurer, but these are the most common examples that are covered by Canadian providers:

  • Different kinds of cancer, such as leukemia, lung cancer, and carcinomas may be considered critical illnesses
  • Stroke, whether hemorrhagic or ischemic
  • Paralysis, whether partial or total
  • Dementia, including Alzheimer’s disease
  • Heart attack
  • Major organ failure on a waiting list
  • Major organ transplant
  • Permanent blindness in one or both eyes

Limitations and Exclusions in Critical Illness Insurance

Note that each illness covered by an insurer’s policy will be very carefully and specifically defined, and there may be specific requirements based on the severity of the condition. As a general rule, most insurers won’t provide coverage if:

  • Your medical condition isn’t on its defined critical illnesses list, a.k.a. it’s a specified exclusion.
  • You have a covered medical condition, but it existed or began before your policy’s effective date.
  • It’s a less severe form of a covered condition.

Here’s a more in-depth explanation of these limits:

Specified Exclusions

Specified exclusions are conditions that your policy explicitly states won’t be covered. There are general specified exclusions, a.k.a. those that the provider excludes for all applicants under their critical illness policies. There are also exclusions specific to your coverage, where your own policy may be offered with clearly excluded conditions due to your personal medical history. Both of these types of specific exclusions will be clearly indicated in your policy.

Partial Coverage

Note that while some policies have specific exclusions for less severe forms of a covered condition, some providers will still deem them eligible for a partial payment instead.

For example, coronary angioplasty is for widening or unblocking arteries and may be considered a less severe issue related to covered diseases like a heart attack. Check your policy’s terms to see which conditions are eligible for partial payments and up to what percentage of the coverage amount will be paid out.

Exclusion Periods 

Your policy may list covered conditions that are subject to an exclusion period. This means that your coverage for these conditions will be excluded if you already showed symptoms of a condition, were diagnosed with a condition, or underwent testing that revealed that you have the condition within a set number of days after buying your policy.

Examples of some illnesses which often have exclusion periods are:

  • Cancer
  • Parkinson’s disease
  • Benign brain tumours

Learn more about exclusion periods and which illnesses are subject to this by talking to your insurance provider.

Factors that influence critical illness insurance premiums

Should I Get Critical Illness Insurance?

Not sure if critical care insurance is right for you? If you fall under any one of these groups, you may consider getting this type of coverage as an extra safety net:

  • Those with a family history of critical illness
  • Individuals who want to supplement their health insurance
  • People with a high risk of developing critical illnesses due to factors such as occupation and lifestyle choices
  • Those looking for additional financial protection, especially for their dependents

There are other options you can look into if you feel that critical illness insurance doesn’t quite fit your needs. Here are other types of insurance that may help you and your loved ones if you get diagnosed with an acute medical condition:

Learn more about these different types of coverage by talking to your broker or insurance provider, or by reading our articles. Each provider has different conditions and coverage, so it’s essential to review policies carefully and shop around before purchasing one.

What Impacts the Cost of Your Critical Illness Insurance Premiums

The cost of your critical illness insurance premiums depends on several factors, such as your lifestyle and age. These are the most common considerations that may raise or lower your premiums:

  • The amount of coverage: The higher the value of your policy and the more illnesses covered by your plan, the more expensive your critical insurance will be.
  • Smoking and tobacco usage: Smokers, tobacco product users, and even those who use e-cigarettes a.k.a. vapes are generally charged higher premiums by health and life insurance companies. This is because they’re considered to be a high-risk group that’s more likely to develop certain diseases.
  • Age: As with health and life insurance coverage, premiums go up with age because of the increased risk of developing critical diseases.
  • Gender: Men and women are more susceptible to different illnesses, affecting their premium costs.

Key Advice From MyChoice

  • Critical care insurance doesn’t cover all illnesses, so compare policies between providers to find the coverage that best suits your needs and preferences.
  • This type of coverage provides financial security so you can focus on recovery and pay for medical expenses after you’re diagnosed.
  • It’s common for companies to exclude covered critical illnesses if they began or existed before the policy’s effective date, so always check your policy’s terms and contact your provider if you have any questions.
  • Shop around and compare rates using MyChoice until you find one that best suits your budget and preferred coverage.
  • Consider getting critical care insurance to supplement an existing term or whole life insurance policy. Think of it as filling in the gaps to manage the financial impact of being diagnosed with a serious illness, which often isn’t covered by life insurance.

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