What Does Critical Illness Insurance Cover & Should You Have It?
Do you need critical illness insurance?
What does critical illness insurance cover and how is it different from disability insurance?
Illness is a part of life. As the pandemic highlighted, illness can happen at any time, whether or not we are prepared for it, and the impacts can be far reaching for you and your family.
In addition to the potential physical and emotional challenges of dealing with a critical illness, the financial impact from an inability to work can be the greatest challenge of all.
Thankfully many employee benefit plans also include critical illness insurance, which can help ease the impact.
Critical Illness Insurance vs. Disability Insurance
While many Canadians have heard of critical illness insurance, there is often confusion around how it differs from disability insurance, and which of the two is a better option. Neither is better nor worse, but the two are different in many ways.
Disability insurance is more common in employee benefit packages and cover a broader range of illnesses. Disability coverage works by replacing a portion of an employee’s income if they become disabled and unable to work.
Critical Illness Insurance
On the other hand, critical illness insurance covers a smaller number of severe illnesses, such as cancer, heart attack and stroke, and provides for a tax-free, lump-sum payment to the employee. This payment can be used at the employee’s discretion, whether to cover the cost of medical treatments not otherwise covered, taking time off work to focus on treatment and recovery, or to take care of other family needs.
Is Critical Illness Insurance Right for you?
While critical illness insurance coverage can be beneficial to all Canadians, it is especially beneficial to employees who have significant financial obligations such as family and/or a mortgage. If this is your situation, you might struggle to meet these obligations if you were sick, even if you had disability coverage.
Want to Learn More About What Critical Illness Insurance Covers?
If you are interested in learning more about critical illness insurance, what it covers, and how it could complement your existing employee benefits plan, please reach out to a Benefit Strategies advisor to find out more.
Additional information on this topic can be found in this Financial Services Commission of Ontario article, Understanding Critical Illness Insurance.