What is critical illness insurance and why is it important? Just about everyone knows someone who has suffered from a long term illness such as cancer and other diseases. A long term illness can severely impact both your employment and life style. Treatment for a critical illness can be very expensive.
Provincial Health Care systems relieve the financial burden to a certain degree, but there are many costly expenses which they don’t cover. A person with a critical illness will have to bear the brunt of all those expenses that Health Care does not cover. This can include very expensive medications, special care attendants and rehabilitation costs, just to name a few.
When you are suffering from a long term or permanent illness, how are you going to pay for these expenses if you can’t work? Employment insurance plans may cover you to a certain extent, if you have such a plan. However, will this be enough to pay the mortgage, bills and other household and medical expenses? Many people only have basic plans with their employers and many others have no alternative insurance plans at all.
Most employers don’t provide critical illness insurance in their employee insurance packages
How Critical Life Insurance can protect you
Basically, critical life insurance was created to give the policy holder a lump sum payment, up to $200,000 in some cases, when a person has been diagnosed with a critical illness.
One of the biggest benefits you receive when you purchase this coverage is that it will almost immediately be provided to you when you have been diagnosed with a serious long term or life threatening illness. This is crucial because many other long term disability coverage plans that may be available often don’t pay out until after 120 days have elapsed. The financial burden can be devastating to both you and your family.
Since you are being paid a lump sum, you aren’t restricted to how the money is spent so you can cover bills according to your needs. You will not be dictated to where the money will be spent by the insurance carrier.
Types of Critical Illness Coverage
There are 3 basic policies that you can buy with an insurance carrier:
- Non Cancellable – Is perhaps the best form of coverage you can buy because the cost of the premium you pay doesn’t change.
- Guaranteed Renewable – Meaning that the coverage is for a specific policy period and is renewable. However, there is no guarantee that you will get the same premium. Most likely the cost of the premium goes up as you get older.
- Return of Premium Contract – Will refund your premium at the end of the contract term if no claim is paid. This tends to be much more expensive than the other 2 types of policy choices.
Make no mistake, this coverage is not cheap. Experts suggest that the earlier you buy this coverage, the cheaper it will cost. They also suggest that a 10 year term is the minimum you should purchase, but this also depends on how much your budget can absorb.
The major benefit of having critical life insurance is that it will give you peace of mind should you experience a serious illness.