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You’ve probably heard the words, Critical Illness Insurance, tossed around a time or two at family dinners and casually nodded while wondering what the heck everyone was talking about. You’re most likely here today because you’re looking for an answer to, “what is Critical Illness Insurance and do you actually need it?”
Well, Critical Illness (CI) insurance offers financial protection that you and your family can use if you– the insured– ever were diagnosed with a covered, life-threatening condition or event. This means you can use the benefit amount received to focus on getting better instead of worrying about what your illness means in terms of your finances.
In this article, we’ll dive deeper into what Critical Illness Insurance is, what it covers– and what it doesn’t– how it works, and the best time to buy (hint, the answer is today!).
Not much of a reader? That’s okay! Contact us today, and we’ll walk you through all the nitty gritty details so you can be a CI pro at your next gathering.
Critical Illness Insurance benefits those that need it most. It was invented to allow those diagnosed with a life-threatening illness to recover and not stress about their family’s financial situation during the tough time.
It all started in South Africa in 1967 with a doctor named Dr. Marius Barnard. He was a heart surgeon who was part of the team that performed the first human-to-human heart transplant. He noticed that, even though he was able to help many patients make a full recovery from their illnesses, they struggled with associated financial difficulties many years after their recovery.
So, in 1983, Dr. Barnard, along with the help of a South African insurance company called Crusader Life, introduced the Critical Illness product to the market. CI was designed to allow people to focus solely on getting better after they’ve experienced a significant medical event, taking the burden of finances out of the picture.
It’s a living benefit, so it pays you a lump sum of tax-free money if you’re diagnosed with a covered life-threatening or highly serious medical condition. While you can find policies that cover additional conditions, the primary covered conditions (which account for about 85% of all claims) include:
The right amount of coverage changes with every person. Just like there is no one size fits all diet or workout plan, the same goes for an insurance coverage plan.
It’s also important to note that each insurance company will offer slightly different packages. The basics (heart attack, stroke, and life-threatening cancer) are a part of almost all plans and account for 85% of all critical illnesses.
Some companies offer coverages for more than 20 additional conditions such as severe burns, blindness, multiple sclerosis, Alzheimer’s, kidney failure and paralysis (just to name a few!).
Depending on your medical history, family history, and financial situation, the best plan for you will change. That’s why we always recommend speaking to one of our Insurance Advisors who can help you discuss what plan makes the most sense for your unique situation.
If you– the insured– find out that you have a life-threatening or life-altering illness which is covered by your plan, you simply chat with your insurance company and submit a claim. From there, they will adjudicate your claim and, once approved, provide you with an amount of money that will be determined based on the plan you have and the premiums you pay.
This specific type of insurance is incredibly important and beneficial because the payout can be used however YOU want. You can use your lump sum benefit to:
…or anything else that eases the burden of an already challenging time.
People choose to buy a CI policy at many different points in life, like when they:
However, there is no specific time you have to purchase. That being said, the best time to buy a Critical Illness Insurance policy is when you’re young, healthy, and can afford the premiums!
Rates are lower the younger you are, and you’ll lock in your rates for the duration of your term, so it’s always a good idea to start sooner than later. (This holds true for all types of insurance!)
Are you a young adult and wondering what other types of insurance plans you should look into now while you’re healthy? Check out our young adult resource page for everything young adults need to know about insurance.
If you get one of the illnesses covered and have CI insurance, you’ll need to submit a claim to access your benefit payment.
At Winnipeg Insurance Brokers Ltd., we know this is a tough time. And as helpful and amazing as CI is, it’s never something people want to use. That’s why our Insurance Advisors are here to make this process as easy as possible. We’ll walk you through every step of this process so that getting the money you need to help ease the burden during this time is as stress-free as possible.
Suppose you were to experience a life-threatening illness such as a heart attack, stroke, or get diagnosed with cancer without having critical illness coverage. In that case, you might still be able to get some sort of coverage plan in the future, but it depends on the situation.
Even if you can get CI insurance in the future, there’s a good chance you’ll have to pay higher rates or have exclusions.
And, of course, you always run the risk of being declined altogether– either for a CI policy or even for a life or disability insurance policy.
That’s why we recommend getting insurance early! It’s always more challenging to get insurance once your health declines or you suffer a health event. And although we hope that this never happens to us, the truth of the matter is, we mostly don’t have control over it. That’s why it’s always in your best interest to be prepared!
Most CI policies have a great ‘Return of Premium’ feature. This means that if you don’t end up using your insurance (in other words, you don’t make a claim), at the end of the contract term, you’ll get back all of the premiums you paid. So, even if you never use your CI insurance, you’re no worse off by having it!
End of term can be when your policy expires– typically age 75 for adults or 25 for children– or when the insured passes away. If the latter were to happen, the premiums would be paid to a beneficiary. Every insurance company offers slightly different policy wordings, so be sure to talk to our Insurance Advisor to find the best option to meet your needs.
Rapid fire answers to the questions you’ve been wondering.
It depends on the policy coverage you have and will vary by the insurance company. Some companies offer coverage for pre-existing conditions only after you’ve been insured with them for a certain amount of time.
Regardless of your Critical Illness Insurance plan, it’s highly unlikely that you’ll be able to pause payments for a period of time.
Typically an insurance company will give you about 30 days grace period to pay your premiums if you’re late on a payment. After the grace period is up, the policy will lapse, and you would have to re-apply all over again (and risk being declined or modified policy and increased rates).
You can cancel your policy if you would like, but if you decide to get this type of coverage again in the future, you’ll need to re-apply. This means that you run the risk of being declined or getting increased rates.
Taking out a critical illness policy for your child helps guarantee their insurability into adulthood. This is important because health can change anytime, and getting insurance later in life isn’t a sure thing.
Having life and living benefits insurance for your child not only takes on the financial burden off your family for things like medical expenses and funerals, but it can also provide the beneficiaries (typically you, the parents) the time they need to grieve without worrying about their financial situation.
Yes, Critical Illness insurance is absolutely worth it. It gives you financial freedom and peace of mind during a difficult time; if you don’t use it, your premiums could be paid back to you.
If you get sick, Critical Illness insurance will reduce your financial stress, help you maintain your lifestyle, and let you focus on getting better. Connect with us today for your commitment-free quote.