Critical Illness Insurance Revisited
Posted by Gail | Filed under Insurance
Did you know that the three most common medical conditions in Canada – cancer, heart attach and stroke – make up about 85% of all the critical illness insurance claims. Yup, The Big Three are the top causes of CI insurance kicking in.
But those aren’t the only illness CI covers. Depending on the policy you choose, you could be covered for up to 20 sicknesses from brain tumour to MS, from Alzheimer’s to blindness, deafness to paralysis. Look for a plan that covers the highest number of variables. And watch the definitions used for critical illness conditions, which also tend to vary from plan to plan. Don’t let the medical terminology baffle you into buying something you don’t understand. Be clear on when you’ll be covered and for what.
Critical Illness insurance pays a lump sum on either diagnosis of the conditions you’ve bought coverage on, or their progress to an agreed state. While a heart attack is a heart attack and requires no further definition, multiple sclerosis might not actually impair your lifestyle for many years.
CI pays out a lump sum of cash that you can use to supplement you cash flow while you’re off work, pay for treatment, or simply get you to and from the hospital. Of course, you have to survive your diagnosis by at least 30 days to get your CI benefit. (If you don’t the policy refunds all the premiums paid.) You could use the money to hire a nanny or a housekeeper. You could use it to provide special equipment or modify your home. There are no limits. As long as you’re diagnosed with a covered condition, you’re in the money.
I often recommend people who don’t qualify for disability insurance look into CI as an option. Since there’s an income requirement for disability insurance that doesn’t exist for CI, it’s a good option for those who choose to stay home with the kids.
As with life insurance, CI premiums are based on the amount of coverage you’re buying. Choose the amount you wished to be covered for, which can range from about $25,000 to the millions. Then provide medical evidence of your good health. (Be warned: a strong emphasis is placed on your family’s health history and a tendency toward a heredity disease such as cancer could result in its omission from your coverage.) The insurer will asses that info along with your age, your gender and whether or not you smoke to figure out your annual premium.
If you think CI is too expensive and you’d rather have the money for your savings account, keep in mind that a unique option available with CI policies is the Return of Premium when the policy expires. Usually expiry happens at age 65 or 75, depending on your policy. If you haven’t had a claim (in which case you would have been very glad to have the policy), the insurance company will refund the full amount of the premiums you paid. This is sometimes referred to as the “no regrets” clause.
If you can’t get disability insurance, or the premiums are just too high to be affordable, consider a CI policy to provide you with some protection against a future health crisis. Remember, however, that your CI policy only covers the conditions listed in the policy. If you develop a serious health condition not covered, you won’t be eligible for a payout.
Casssie Howard of MrsJanuary.com has written a new e-book called Money In Your Pocket, which focuses on saving money on your grocery bills. I’ve had a look at her book and liked what I saw. Cassie is giving away copies of her ebook to five lucky people here. I’ll be awarding one copy a day this week. To enter answer the question of the day. Today’s question: What one money lesson do you wish you had learned earlier in your life?