Realistically speaking, the list of illnesses a human being may face over their lifetime can be extensive and potentially life-changing. According to statistics, 2 out of 5 Canadians are expected to develop cancer during their lifetime, while 1 in 12 Canadians is likely to live with a diagnosed heart disease. Taking this into account, Critical Illness insurance surely seems like a good financial tool to have. However, there are many myths and misconceptions when it comes to this type of plan. Most people do not know how it works or what it covers, and that is why we decided to gather some of the most commonly heard myths and debunk them. But first…

… what exactly is Critical Illness Insurance?

Statistics conclude that only 6 in 10 working Canadians have heard of critical illness insurance, which explains why there are so many misbeliefs about it.

Critical Illness is a type of insurance that pays a one-time lump-sum payment if diagnosed with a covered condition or illness. The benefit you receive will depend on the amount of coverage that you choose, but it can typically range from a few thousand dollars to as high as $2 million. The payment can cover many costs, such as medical care or travel expenses, or even to hire a caregiver. It is up to you to decide how to use the benefit.

In short, Critical Illness insurance protects you and your family from the financial constraints related to getting critically sick, allowing you to focus on recovery, rather than paying bills.

Who should apply for Critical Illness insurance?

People generally do not expect to get sick. Unfortunately, it can happen at any moment, dramatically changing the quality of life of any individual, not only emotionally, but also financially.
According to the Canadian Institute of Actuaries, Canadian men have a 37% risk of contracting one critical illness before age 75, while women have a 30% probability. Considering these numbers, it is entirely reasonable to claim that everyone can benefit from Critical Illness insurance, especially those who fear the economic impact that a disease can cause to their lifestyles.

For instance, if you do not have enough savings to cover your expenses if you become seriously ill, or if you assume that your province’s health benefits will not be enough to replace your income, this type of insurance can give you peace of mind.

The main myths

Before jumping to conclusions, it is essential to understand how Critical Illness insurance truly works. Although all plans share the same goal – ease the financial pressures of suffering from a severe illness –, every insurance company offers different products and quotes. That is why it is important to debunk the myths surrounding this type of insurance. Here are some of the most common misconceptions:

1. If I get seriously ill, my government health plan will be responsible for my medical expenses.

This is partially true. The government will cover some of your medical expenses, but not all of them. While the general costs vary from province to province, there are many expenses related to critical illness treatment and recovery that will not be supported by public health care. If you suffer a stroke, for example, you might need to make some structural changes to your home, like installing ramps or a lift. These unexpected (and often expensive) costs are not usually covered by work or provincial health plans, which is why having insurance can make a huge difference. If you want to make sure that you and your family are financially ready for a life-altering illness and all the expenses that it can generate, investing in a Critical Illness plan is the best solution.

2. I cannot get coverage if I have a pre-condition.

Critical Illness insurance comes in many different forms. For some plans, you must do a medical screening or a blood test in order to qualify for the policy. For others, you only need to answer a small questioner about your health status. And, for many others, there are no requirements at all! If you have a pre-existing condition, like diabetes or asthma, you might have to pay a high premium, but you will always be able to buy Critical Illness insurance. Even if you survived a more severe condition, like heart disease or cancer, you can still find an insurance plan for you. At Specialty Life Insurance, for instance, we can offer you Guaranteed Approval for your Critical Illness insurance, which means that, regardless of your state of health, family history, pre-conditions, or lifestyle, you will be able to purchase our coverage.

3. I am too young / too healthy to buy Critical Illness Insurance.

Unfortunately, you never know when a critical illness might knock on your door. Even if you are young and remarkably healthy, you can still face a life-changing disease or condition. Nowadays, unhealthy food habits, physical inactivity, and stressful lifestyles impact the health of younger generations. Stroke rates have crept up 11% in Canadians between 20 and 59 from 2006 to 2015, while over 38,000 Canadians aged 20 to 39 years old have been diagnosed with ischemic heart disease. This shows that there are no certainties when it comes to health, and that is always better to be safe than sorry.

Besides, it is wise to invest in this type of insurance while you are young, ideally under 50. When it comes to Critical Illness insurance, the healthier and younger you are, the less you will have to pay for coverage. In fact, even your lifestyle can have a significant impact on your premiums. For example, if you do sports and exercise regularly, this may result in the exclusion of increased premiums.

4. Critical Illness Insurance is the same as Life Insurance.

Life insurance policies and critical illness policies are quite different. Life Insurance pays a benefit to your beneficiary, or beneficiaries, upon your death. On the other hand, Critical Illness insurance pays a living benefit to you. Its goal is to help you cover your expenses while you are being treated or recovering from a severe illness or condition.

Another common mistake that people make is thinking that once diagnosed with a critical disease, it is better to have Life insurance because chances of survival are meagre. However, here are some encouraging facts that contradict this belief: nowadays, 60% of Canadians live longer than five years after being diagnosed with cancer, while more than 90% survive a heart attack. Considering these statistics, it is evident that a diagnosis does not automatically mean death.

In any case, deciding whether to buy Life insurance or a Critical Illness policy should rely on you and your personal circumstances. As they complement each other, you can even purchase a policy that integrates both plans to enjoy total peace of mind.

5. Critical Illness Insurance is the same as Disability Insurance.

Not at all! Although many people confuse these two types of coverage, they are nothing alike. Disability insurance replaces your income with a monthly payment if you are unable to work due to an injury or illness. Critical illness insurance provides a lump-sum payment if you are diagnosed with a covered critical illness or condition. The benefit of this type of plan is that you can freely decide how to use the funds, even if you recover rapidly. Disability insurance, on the other hand, provides a monthly payment structure (usually 60% or 70% of your income) that mimics your paycheque. As such, it typically ceases upon resuming work.

While everyone might benefit from Critical Illness Insurance, Disability insurance is usually a preferred option for people that work in manual labour or specialized positions. In this case, it makes more sense for someone with a dangerous job to apply for a disability plan.

6. Critical Illness Insurance covers all types of illnesses and conditions.

A common misconception is that Critical Illness plans cover all types of illnesses and conditions. This is a dangerous myth that often leads to denied claims. Critical Illness insurances always come with a list of insurable illnesses. In Canada, this list can vary a lot from provider to provider. Some plans cover three ailments (cancer, heart attack, and stroke) and some cover over 20. That is why you need to assess your needs and expectations before buying any insurance and carefully read every detail.

Even if a plan states that it offers coverage for cancer, you must consult exactly which types. Some, like skin cancer or early-stage prostate cancer, are not generally part of the plan. Besides, some policies may also have coverage restrictions that limit or eliminate your coverage based on your condition or medical history. For example, even if your insurance plan covers heart attacks, your benefit can be denied if you had a previous heart condition.

7. The coverage starts immediately.

Many people believe that once you are diagnosed with a critical illness, you get paid immediately. That is not entirely true. First, you need to ensure that your condition meets the definition in your policy, including the severity and duration, and a qualified physician or specialist recognizes it. Then, you must be aware of the waiting period stated in your policy.

To prevent insurance fraud, all Critical Illness insurance policies come with a waiting period that varies from provider to provider. Generally, the benefit is payable after a 30-day survival period (90 days in the case of life-threatening cancer, such as pancreatic cancer) following the first diagnosis of a covered condition. If you meet all requirements, the benefit payment occurs 30 days after the claim is approved. Once your claim is paid, your insurance policy ceases.

8. Critical Illness Insurance is too expensive.

This is very relative. As we already mentioned, many factors determine the cost of this type of insurance, such as age, lifestyle, smoking status, or health. Other factors are policy-dependent and related to the amount of coverage, the number of illnesses covered, and the term length. In any case, a Critical Illness insurance plan is not generally that expensive, especially if you compare it to the real costs of a life-altering disease.

For instance, for a 30-year-old man who is a non-smoker and in good health, the cost of $100,000 of critical illness cover for a period of 20 years would be about $25 per month. On the other hand, for a 55-year-old smoker, a $100,000 of critical illness cover for a period of 20 years could cost as much as $350 per month. The differences can be quite striking, depending on your profile and circumstances. Still, one thing is for certain: the younger and healthier you are, the more likely you are to have lower premiums.

How Specialty Life Insurance Can Help

No one can anticipate what the future holds, but we can try to be as prepared as possible for life’s unpredictability. Investing in Critical Illness insurance can protect you and your loved ones from the financial and emotional impact of a critical illness. Even if you trust your workgroup benefits plan or your province’s healthcare, the truth is that surviving a life-altering illness usually involves more costs than you might expect. In fact, illnesses and medical problems are one of the leading causes of bankruptcy in Canada, so even if you are covered, it may be worth talking to an advisor about acquiring your own insurance. Nowadays, insurance companies offer personalized solutions to meet every unique need and circumstance, so there is no doubt that you will find the perfect plan for you and your family.

If you are still feeling hesitant, we at Specialty Life Insurance will be more than happy to help clear your doubts and give you all the required information to make a conscious decision. And if you want to get an idea of how much Critical Illness insurance would cost you, you can use this very short no-obligation quote form. By answering a few questions, you can determine the best rates for your needs.

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