It was a world-famous heart surgeon, Dr. Marius Barnard, who created critical illness insurance, as he saw how the financial stress that accompanied cancer, heart attack and stroke was killing his patients.
Critical illness insurance can cover cancer, heart attack, stroke, coronary artery bypass surgery, aortic surgery, and up to 20 additional conditions depending on the type and scope of your coverage. Watch this Global News production on the financial and emotional devastation a critical illness can cost, here in Canada:
Consider these numbers:
- 9 out of 10 Canadian families touched by cancer report financial troubles caused by the disease, according to the Canadian Cancer Society and it usually takes 8 to 16 weeks to return to work after a heart attack.
- About 2 in 5 Canadians will develop cancer in their lifetimes and 1 in 4 will die of the disease.
- 63% of Canadians diagnosed with cancer will survive at least 5 years after their diagnosis.
- An estimated 1.6 million Canadians are living with heart disease or the effects of a stroke.
- More than 400,000 Canadians are living with long-term stroke disability.
- Each year more than 350,000 Canadians are hospitalized for heart disease or stroke.
But one of the challenges of critical illness insurance is understanding the many ways you can use the benefit—the money paid out—if you ever need it. Here are some of the ways I have seen:
1. To pay for expenses related to health care that are not covered by OHIP. This is the most obvious use, especially as prescription drug expenses are often not covered by OHIP and continue to increase.
2. Expenses not covered by health insurance like travel, hotels, babysitting, etc. I know a person who was diagnosed with colon cancer. His doctor told him, “You need to go to MD Feely.” Complicating the whole issue, he and his wife had just had a child. So, they took his father-in-law along to watch his son. He had to charge airfare, meals and the hotel costs to his credit card. Several years later, he was still paying off that credit card.
3. Income protection, especially for the self-employed. If a self-employed person has an income-protection plan, including disability insurance, it most likely will have a 90-day elimination period before benefits are paid. One self-employed person I know was diagnosed with cancer. She would take her chemo treatments on Fridays. Then she would use the weekend to recover and try to be back at work on Monday or Tuesday. She did not miss enough days from work to meet her elimination period. Did the cancer impact her income? Significantly!
4. Mortgage protection. Many people purchase life insurance so that if anything happens to them, the family’s home will be paid off and the family will be able to stay in the home. But what’s more likely to happen while paying off a mortgage—death or a critical illness? Depending on age, you could be as much as four times more likely to suffer a critical illness while paying a mortgage than to die.
Typically, insurance that covers from two to five years of mortgage payments will help significantly through the transition. A great thought-provoking question is, “Would it reduce your financial stress if you are diagnosed with cancer to know your mortgage will be paid for two years?”
5. Retrofit a home or car. I had a woman tell me that her husband had had a stroke. The couple had to take out a second mortgage to make modifications to their home, including a wheelchair ramp, significant changes to their bathroom, and the widening of doorways to accommodate the wheelchair.
No matter how you’d use the money, critical illness insurance always does one thing: It reduces financial stress. There is always emotional stress for a family with a family member who has a critical illness. Emotional stress increases directly with financial stress. A critical illness plan reduces the financial stress, which then reduces emotional stress. You can purchase a critical illness policy up to age 65.
One feature of many policies is Return of Premium on Surrender, which means that all the premiums you ever paid are refunded to you when you surrender the policy after a certain number of years. So the only real cost to you is the foregone returns on the money you have tied up – and you are covered if something happens during the years you are paying premiums. If you’d like to learn more about this important coverage, contact me to determine the best coverage for you and your family.