Protection from a major health event and a little forced savings for your healthy future self.
We make plans for many reasons—whether it’s a family vacation or scheduling our workday. But do you have a plan in case you’re diagnosed with a serious illness, such as cancer, a heart attack, or a stroke? Such a situation could turn your life upside down.
Critical illness insurance coverage can help financially protect you if the unexpected should happen. It is insurance coverage where, if you’re diagnosed with a covered critical condition, you receive a lump-sum payment. You decide how to spend this cash. For example, if you can’t work because of your illness, this money can help cover lost income, pay the bills, or cover any treatments you might need.
One of the unique features in the Canadian living benefit insurance market is the ability to receive all your premiums back if you don’t claim on the contract.
Did You Know?
With this product, you get a cheque from the insurance company for every premium dollar you paid over the life of the contract. There is no other insurance product that allows you to receive all your premiums back if you don’t use it. This makes critical illness insurance not just a safety net, but a forced savings plan.
Plan Options: Finding the Right Fit
When you look at critical illness insurance coverage, the first thing you need to decide is how long you want your coverage to last. Coverage is generally divided into temporary (term) and lifelong (permanent).
Temporary (Term) Coverage
True to its name, temporary coverage lasts for a set period—10 years, 20 years, or until you turn 75. Temporary coverage is ideal for people who need affordable coverage for a shorter period. For example, if you have a young family and/or a mortgage to cover, temporary coverage may be what you need.
| Term Option | Best Suited For | Key Features |
|---|---|---|
| Term 10 | Those wanting the lowest cost option available. | Requires regular renewals and future decisions about coverage. |
| Term 20 | Those needing coverage for a longer period (e.g., until a mortgage is paid off). | Allows you to revisit your coverage less often. |
| Level Premium (Term-to-Age 75) | Those wanting consistent payments until age 75. | Coverage lasts until you turn 75 or make a claim, with the same premium payments from day one. |
Lifetime (Permanent) Coverage
These policies last from the day your policy becomes active until you make a claim. Your premium payments stay the same while your policy is active, and your coverage continues for life. Lifetime coverage is ideal for people who want protection for life, and don’t want to worry about renewing or converting it later.
Covered Conditions
Your critical illness insurance coverage protects you if you’re diagnosed with one of many critical conditions. While policies vary, a comprehensive plan typically covers up to 25 conditions. The table below outlines the most commonly covered conditions:
| Condition | Condition | Condition |
|---|---|---|
| Life-threatening cancer | Heart attack | Stroke |
| Coronary artery bypass surgery | Aortic surgery | Heart valve replacement or repair |
| Acquired brain injury | Aplastic anemia | Bacterial meningitis |
| Benign brain tumour | Blindness | Coma |
| Deafness | Dementia (including Alzheimer’s) | Kidney failure |
| Loss of limbs | Loss of speech | Major organ failure on waiting list |
| Major organ transplant | Motor neuron disease | Multiple sclerosis |
| Occupational HIV infection | Paralysis | Parkinson’s disease |
| Severe burns |
Included Features and Benefits
Whether you buy a term or permanent critical illness insurance policy, you often get valuable features that enhance your coverage:
Illness Assist Benefit: If you’re diagnosed with certain early-stage conditions (like early prostate cancer or early thyroid cancer), you may receive a smaller lump-sum payment (e.g., 15% of your benefit) without ending your overall coverage.
Surgery Advance: If you’re diagnosed with a covered condition and need surgery, some plans offer an upfront payment (e.g., 10% of your benefit) to help with immediate costs.
Return of Premium: Many plans offer a Return of Premium (ROP) rider. If you stay healthy and never make a claim, you receive 100% of your paid premiums back at a specified time (e.g., at age 75 or upon policy expiry).
Example: The Forced Savings Plan in Action
In the below example, during the 35 years of coverage, you are entitled to $100,000 if you survive a major illness such as Cancer, Heart Attack, or Stroke. There are many more covered conditions, however, these three are the most common that people will claim on.
| Major Illness Recovery Benefit | Female age 40 |
|---|---|
| Coverage to age 75 | $100,000 |
| Annual Premium | $1,700/year |
| Total Premium returned @ age 75 | $59,500 |
If you remain healthy and never make a claim, you receive a cheque for $59,500 at age 75. It’s a win-win: protection when you need it, and a significant cash return if you don’t.
Plan for the Unexpected Today
Critical illness insurance is more than just protection; it’s a strategic financial tool that can act as a forced savings plan for your healthy future self. At Safe Haven Financial, we can help you navigate the options and find the perfect plan for your needs.
Ready to secure your future? Contact Safe Haven Financial today for a personalized consultation.
