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Critical Illness vs Disability Insurance: A Guide for Manitobans

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October 16, 2023


Most life insurance plans rely on death benefits: sums of money that get paid out when the plan holder passes away. These benefits matter, but because they’re only accessible following a death, they leave a gap in coverage. What happens financially if you or a loved one gets seriously sick or injured without passing away?

Critical illness and disability insurance are living benefits, and they exist to fill that coverage gap. But aside from that, they don’t have much in common. So it’s not simply a matter of picking one or the other.

Do you need both critical illness and disability insurance? And if not, which one is right for you? These are the questions we’ll help you answer today.

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Reach out and contact us. Our Insurance Consultants are standing by and ready to help you make sense of all this.

Jump To The Answer You Need

What Is Critical Illness Insurance?

Critical Illness Insurance is a living benefit that pays you a lump sum of tax-free money if you’re diagnosed with a covered life-threatening or highly serious medical condition. It was invented to allow those diagnosed with a life-threatening illness to recover without stressing about their family’s finances during an already very tough time.

What Conditions Are Covered By Critical Illness Insurance?

Heart attack, stroke, and life-threatening cancer account for about 85% of all claims, but a critical illness policy may cover you if you’re diagnosed with any of the following conditions (note each insurance company offers slightly different Critical Illness coverage options, so best to contact us to find out which policy is best for you!):

  • Acquired brain injury
  • Aortic surgery
  • Aplastic anemia
  • Bacterial meningitis
  • Benign brain tumour
  • Blindness
  • Coma
  • Coronary artery bypass surgery
  • Deafness
  • Dementia, including
  • Alzheimer’s disease
  • Heart attack
  • Heart valve replacement or repair
  • Kidney failure
  • Life-threatening cancer
  • Loss of limbs
  • Loss of speech
  • Major organ failure
  • Major organ transplant
  • Motor neuron disease
  • Multiple sclerosis
  • Occupational HIV infection
  • Paralysis
  • Parkinson’s disease
  • Severe burns
  • Stroke

Critical illness coverage is available from birth to age 100, and eligibility depends on factors such as your health, family history, and age.

Is Critical Illness Insurance Worth It?

Critical Illness Insurance is absolutely worth it for two reasons:

  1. It allows you to use your lump sum payment however you want to.
  2. Many plans include an option to pay back all the premiums you’ve paid if you don’t end up claiming on your insurance.

Many people use their benefits to cover costs like additional medical expenses, treatments, and medications (in Canada or abroad) or to cover living expenses. Things like paying off financial obligations, taking a leave from work or a family vacation, and simply maintaining your lifestyle are all okay. You truly can use this money however you need to!

Critical Illness Insurance can also be purchased either on its own or as an add-on to your existing life insurance policy.

Sold on critical illness insurance?

Want more detailed information? Read our Guide to Critical Illness Insurance for Manitobans.

What Is Disability Insurance?

Disability insurance protects your monthly income by allowing you to continue bringing in money while a serious illness or injury leaves you with either a short-term, long-term, or permanent disability. It provides monthly payments until A) you get better or B) your coverage period ends—whichever comes first.

Payments typically aren’t enough to replace all of your lost wages, but they do provide the peace of mind of knowing that at least some money is coming in each month!

What Conditions Are Covered By Disability Insurance?

Disability Insurance covers any condition that prevents someone from working, from physical disabilities to chronic illnesses and even mental health issues. However, the eligibility of each claim depends on both the policy and the insurance company providing it.

How Much Disability Insurance Do I Need?

Any employed or self-employed person between the ages of 18 and 65 can apply for coverage. The amount of disability insurance you need (and can get), will come down to how you truthfully answer questions like the ones below.

(These are the same types of questions your insurance company will use to determine how much insurance you’re eligible for and how much you’ll pay each month.)

  1. How old are you? (Generally, individuals between 18-65 years old are eligible.)
  2. What is the nature of your job? (If your job is high-risk, you may want more insurance, but chances are you’re also less eligible and may pay more.)
  3. What is your health and medical history like? (Any pre-existing conditions may be excluded from your policy or raise your premiums.)
  4. What is your annual income? (You’ll want a large enough coverage amount to replace at least a large portion of your income.)
  5. How risky are your lifestyle and hobbies? (Things like smoking and drug use can impact your eligibility and your premiums.)
  6. Do you have existing coverage? Insurers want to avoid over-insuring you, so if you already have a plan, you might not be as eligible.

If you’re older, your job or lifestyle is riskier, or you have pre-existing conditions, high income, or existing coverage, you’ll be less eligible for insurance. And, you can expect to pay higher rates for the coverage you are able to secure.

But, if you’re younger, relatively healthy, your job and lifestyle are low-risk, and you don’t have any other coverage, you’ll have an easier time getting the coverage you want at a lower rate.

Wondering what you’d qualify for?

What’s The Difference Between Disability And Critical Illness Insurance In Canada?

Disability Insurance is similar to Critical Illness Insurance in that both pay out living benefits that you can use however you see fit—but the payments you’ll receive are quite different. While Critical Illness Insurance gives you one large lump sum, Disability Insurance gives you steady monthly payments.

Coverage terms are eligibility vary, too. While Critical Illness Insurance is generally available for anyone between the ages of 0 and 100, Disability Insurance is only available for employed people between the ages of 18 and 65.

And, while Critical Illness benefits are paid out following a life-changing diagnosis—regardless of how your diagnosis affects your ability to work—disability benefits are only paid out if you receive a diagnosis or get injured and can no longer work.

Critical Illness vs. Disability Insurance

If you were eligible for both full critical illness and disability insurance, your coverage would be as follows:

 Critical Illness Insurance*Disability Insurance*
Who It CoversAnyoneWorkers
Length of CoverageLifetime
(Birth-100 Years)

Working years

What It Covers25 covered, life-changing illnessesAny eligible injury or illness that impedes your ability to work
Payment TypeOne large lump sumSmaller monthly payments
Heart Attack✔ Yes✔ Yes
IF it impacts your ability to work
Stroke✔ Yes✔ Yes
IF it impacts your ability to work
Life-Threatening Cancer✔ Yes✔ Yes
IF it impacts your ability to work
Meningitis✔ Yes✔ Yes
IF it impacts your ability to work
Blindness✔ Yes✔ Yes
IF it impacts your ability to work
Coma✔ Yes✔ Yes
IF it impacts your ability to work
Loss of Limbs✔ Yes✔ Yes
IF it impacts your ability to work
Loss of Speech✔ Yes✔ Yes
IF it impacts your ability to work
Brain Injury✔ Yes✔ Yes
IF it impacts your ability to work
Organ Failure✔ Yes✔ Yes
IF it impacts your ability to work
MS✔ Yes✔ Yes
IF it impacts your ability to work
Paralysis✔ Yes✔ Yes
IF it impacts your ability to work
Parkinson’s Disease✔ Yes✔ Yes
IF it impacts your ability to work
Severe Burns✔ Yes✔ Yes
IF it impacts your ability to work
Chronic Illness

? Maybe
Depending upon an impact to your activities of daily living

✔ Yes
IF it impacts your ability to work
Chronic Mental Health Issue✘ No✔ Yes
IF it impacts your ability to work
Surgery✔ Yes
IF related to a covered condition
✔ Yes
IF it impacts your ability to work
Dementia✔ Yes✔ Yes
IF it impacts your ability to work

*These are subject to change depending upon the insurance company policy you purchase, as not all insurance companies offer the same coverage options.

Coverage Scenarios: When Disability & Critical Illness Insurance Get Paid Out

Both disability and critical illness insurance provide financial protection and peace of mind. But, apart from that, they are quite different in how they work and what they cover. It can get a little confusing to decide whether you need both or just one. We hope these example scenarios will help make it all a little clearer!

Critical Illness Insurance Scenario

If you suffered a heart attack that required you to take 2 months off to recover, but allowed you to go back to your low-stress desk job shortly after, your critical illness insurance lump sum would cover you. The large, one-time amount would be enough for you and your spouse to take 2 full months off work without stress—and even sneak in that long overdue vacation before heading back to work.

Disability Insurance Scenario

If you broke your hand playing hockey and that left you unable to return to your job as a massage therapist for 6 months, your monthly disability insurance payments would cover you. You’d get a check deposited into your account each month, and while it might not leave you feeling flush with cash, it would get you through this difficult time without going into debt or emptying your savings account.

Disability and Critical Illness Insurance Scenario

If you were diagnosed with life-changing cancer that left you unable to work for 3 years, both benefits could cover you. You would receive both a large, tax-free sum of money (critical insurance) and a monthly check (disability insurance) until the end of your coverage period. This would allow you to pay for the big stuff: taking time off for your treatments, travelling to the US for additional care, and taking your family to Disney World while you recover—all while money continues to be deposited into your bank account each month.

Non-Covered Scenario

The reality is that you could also become sick with an illness that’s life-changing and leaves you unable to work…but that’s not covered by either Critical Illness or Disability insurance. And, in this case, you wouldn’t receive any benefit at all. (There were certainly people in this boat in 2020.)

We know this type of scenario is what makes buying insurance seem risky! But remember that, at least for Critical Illness Insurance, many policies have a great ‘Return of Premium’ option. This means that, for an additional premium, if you don’t end up using your insurance, at the end of the contract term, you’ll get back all of the premiums you paid. So, even if you never use it, you’re no worse off having it! Think of it as a forced savings plan!

Critical illness and disability insurance are both incredibly valuable, but they’re not created equal. Even though they’re both living benefits, the way they’re paid out and the circumstances they cover don’t overlap that much. So it’s not a matter of just picking one of the other.

The best thing to do is to understand the types of insurance that best suit your life, and then curate a policy that covers as many of your bases as possible. If that feels overwhelming, get in touch. We’d love to walk you through it!