Gabriel Lalonde
August 22, 2020

Is critical illness insurance worth it?

Have you ever thought about how you would pay your bills if you had a critical illness?

Maybe not. After all, it’s not the most enjoyable way to pass the time. Still, it’s worth thinking about for a minute, especially when you see these statistics:

Nearly 1 in 2 Canadians expected to get cancer: report

In other words, serious health problems do happen. The scary thing is that many people don’t have the money to pay the bills that result from them. That’s where critical illness insurance can become a lifeline.

So, if you have ever considered buying critical illness insurance, here’s what you need to know.

What is it?

Critical illness insurance provides coverage for a specific, severe health problem over a certain period of time.

You can purchase a standalone policy or add it as a rider to your life insurance policy.

Why might someone consider it?

People are living longer than ever before. In the past, we didn’t have antibiotics, vaccinations, or other medical interventions to save or extend lives. Now, it’s probably more likely that someone might pass from a heart attack at 85 than of smallpox when they are 20.

Traditional health insurance coverage only goes so far. Even with great health insurance, you may face astronomically high medical bills if a critical illness befalls you.

Plus, payouts from a critical illness policy don’t have to go just towards healthcare costs. They can be used to pay many other expenses. So, if you lose your job due to your illness, you can use your insurance payout to cover your mortgage.

How much does it cost — and is it worth the money?

The answer is, probably.

A basic critical illness policy can typically run between $25 and $50 per month. Some employers offer them as supplemental insurance, which can mean a significant discount.

Your age, gender, and whether or not you smoke, can affect the monthly cost.

Another nice thing about Critical illness insurance is the ability to add the return of premium option to your policy. Which means that if you do not make a claim after a set amount of time (usually starting at 15 years) you get all your money back – tax free!

The downside to critical illness insurance is that its coverage can be quite limited. For example, if you go into renal failure and need a kidney transplant — but your policy only covers cancer — you’re out of luck.

Critical illness insurance can have other restrictions, too, so be sure to read the fine print. A cancer diagnosis, for example, may only lead to a payout if it’s life-threatening, or if it spreads. Or a policy might only pay out a percentage of your premiums.

Of course, you could choose to buy expanded coverage that goes beyond the basics. But that will cost you more than a basic policy.

That said, medical expenses are reported to be the cause for two-thirds of bankruptcy filings in the Canada. Which makes critical illness insurance worth considering, especially if there are major (and specific) health problems that run in your family.

Are you thinking about buying a critical illness policy? Let us help you make that decision. Call the MDL Financial team to make an appointment with one of our financial advisors today.

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