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What is Critical Illness Insurance: Why do We Need It?

December 20, 2021

What is Critical Illness Insurance Why do We Need It

Critical illnesses like cancer, stroke and heart attack are pretty common in Canada. In fact, approximately one third of us will have one of these conditions in our lifetime. The good news is, that these conditions are increasingly survivable thanks to modern medicine. Unfortunately, the financial cost of suffering a critical illness can be extreme. And that’s where critical illness insurance comes in.

Critical illness (CI) insurance is meant to provide a financial safety net for those who survive a critical illness. Medical costs (many of which are not covered by OHIP), lost wages from not being able to work, and additional expenses like home care, child care, etc. add up. CI Insurance protects you by providing a lump sum payment if you survive a critical illness by 30 days.

Why is there Critical Illness Insurance today?

The concept of critical illness insurance was developed by a South African doctor, Marius Barnard who saw the financial hardship caused to his patients when they would experience a critical illness. Many of them – even though they were recovering or still quite sick – would return to work because it was the only way to take care of their families.

They were literally endangering their health and even their lives because they could not afford to take time off work and recover.

Barnard convinced insurance companies that a new type of insurance was necessary. One that would provide the financial support that these people needed.

When Does Critical Illness Insurance Pay Out?

At their most basic, CI policies will cover illnesses such as heart attack, stroke, and life-threatening cancer. The policyholder must survive their condition for at least 30 days before the policy will pay out and they will require a statement from their doctor about their condition.

Some CI policies also cover other critical conditions such as multiple sclerosis and kidney disease.

Why You Need Critical Illness Insurance:

As mentioned early, the chance of having a critical illness at some point in your life is about one in three – in other words, it’s pretty high. And the cost of going through a critical illness is high as well. While some people assume that universal health care means they’ll be taken care of, this isn’t necessarily true. Many cancer drugs cost thousands of dollars and are not covered by OHIP.

Furthermore, it is likely you will want or need to take some time off work. Perhaps you have short term disability insurance through your work that will allow you to take a few months off – but what if you need to take a year? Would this be feasible for you if you weren’t making an income? CI Insurance can make it possible!

The money paid out by CI insurance may be used for anything you choose – whether it is paying for medical care, replacing your income, or even taking a trip. It is there to allow you to stop worrying about finances and focus on your recovery.