Winnipeg Insurance Brokers Ltd. Unit 106-2565 Portage Avenue, Winnipeg, MB R3J 0P4
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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.
Reach out and contact us. Our Insurance Consultants are standing by and ready to help you make sense of all this.
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.
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!):
Critical illness coverage is available from birth to age 100, and eligibility depends on factors such as your health, family history, and age.
Critical Illness Insurance is absolutely worth it for two reasons:
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.
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!
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.
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.)
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?
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.
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 Covers | Anyone | Workers |
| Length of Coverage | Lifetime (Birth-100 Years) | Working years |
| What It Covers | 25 covered, life-changing illnesses | Any eligible injury or illness that impedes your ability to work |
| Payment Type | One large lump sum | Smaller 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 | ✔ 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.
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!
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.
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.
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.
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!
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We love it here, too.
We are committed to the communities where we live and work, and we demonstrate our commitment by taking part in sponsorship and volunteer programs.
Winnipeg Insurance Brokers Ltd. Unit 106-2565 Portage Avenue, Winnipeg, MB R3J 0P4
Winnipeg Insurance Brokers Ltd. serves our clients and operates on Treaty One land; homeland of the Anishinaabe, Cree, Oji-Cree, Ojibway, Dakota, and Dene Peoples, and the homeland of the Red River Metis. Our drinking water comes from Shoal Lake 40 First Nation, in Treaty Three territory. We respect the treaties, the land, and the water that sustain us.