Critical Illness Insurance is increasingly attractive to individuals looking to secure their financial health in the event of illness.
A number of companies now offer this type of insurance, each with its own set of conditions. Take the time to familiarize yourself with the main features of this type of insurance so that you can better compare the various offerings when shopping around.
What to Look For in Critical Illness Insurance
How is Critical Illness Insurance sold?
- Some critical illness policies are sold alone or combined with other types of critical illness or life insurance coverage.
- You can also acquire critical illness insurance through a Universal Life policy and thereby enjoy greater benefits and flexibility. To find out more about Universal Life Insurance, click on What to Look For in Universal Life Insurance.
- More and more insurance products now combine the payment of benefits in the event of serious illness with the payment of an amount upon your death. This type of product is generally less expensive than buying life and critical illness coverage separately, since the amount of benefits normally payable upon death is reduced by the amount paid during serious illness.
However, before choosing this combined product, ask yourself if you want your death benefits to remain the same following serious illness. If the answer is yes, then purchasing separate critical illness insurance coverage is the better choice.
At Desjardins Financial Security, critical illness insurance is sold alone, with other types of life and health insurance coverage, or as part of a plan that combines the payment of benefits in the event of serious illness with the payment of an amount upon your death. If you wish to learn more about the Critical Illness Insurance, click on I'm Shopping for a Product.
Coverage
Minimum and maximum ages and coverage
Minimums and maximums vary from product to product and company to company on
- the amount of Critical Illness Insurance you can purchase and
- the age of the insured person. (Insurers use two main ways to determine age: some use the age of the insured person at their last birthday and others use their age at their closest birthday.)
Duration and type of protection
Here again, different options are available:
- For example, is the amount of coverage fixed or does it decrease with time? Is it the same for all the illnesses covered?
- At what age does coverage end?
- If you choose a policy whose premiums increase over time so as to maximize your protection in the short term according to your available budget, can you change the policy later to freeze your premiums without having to provide proof of good health?
Illnesses covered, restrictions and exclusions
Find out which medical conditions commonly covered by insurance companies are covered by the particular critical illness insurance policy you want to buy, for example:
- Heart attack, stroke, coronary artery bypass, cancer, kidney failure, organ transplant, major organ failure on waiting list, multiple sclerosis, blindness, deafness, coma, Alzheimer's disease, Parkinson's disease, speech loss, loss of limbs, paralysis, etc.
It is also good to know that definitions of medical conditions are based on standards of medical practice and that the diagnosis of a condition by a qualified physician practicing in Canada usually entitles the insured person to benefits.
However, some restrictions and exclusions will apply, depending on the company and medical condition:
- For example, in the case of paralysis, some companies require that the condition persist for 180 days while others only require that it last for 90 days.
Other exclusions are systematically written into almost all contracts available on the market.
- One such exclusion is the diagnosis of cancer within the first 90 days of the contract taking effect, as well as self-mutilation.
Refund of premiums
Many companies automatically refund premiums upon death if no benefits were paid. But some companies offer more generous refunds than others. For this reason, it is important to clarify the following:
- Does the refund include interest at a predetermined rate?
- Is the refund subject to a maximum limit?
In exchange for a premium surcharge, some companies also offer premium refunds at a particular age. What are the main criteria for refunds, other than not having received benefits?
- Does the refund apply only at a given age?
- Is it paid in full or in part?
- Does it include interest at a predetermined rate?
Insuring other people
Perhaps you would like several other people, such as your spouse or your business partners, to be covered by your critical illness insurance policy.
- Is it possible to provide them with individual critical illness coverage under a single contract?
Premiums
There are certain premium-related features you should inquire into:
- Up to what age are premiums payable?
- Are they fixed or will they change after a predetermined period?
- Are they guaranteed right up to the end of the payment period or, if applicable, for each of the terms?
Payment terms
Insurers offer a variety of premium payment methods:
- Can the payments be made on a monthly, quarterly, semi-annual or annual basis? It's important to compare premiums with the same frequency because one policy may be more competitive than another at one frequency, but not at a different frequency.
- Can you make your payments by preauthorized bank withdrawals, credit card, cheque, etc.?
How to compare premiums
Premiums vary from product to product and from company to company based on the features outlined above, the sex of the person to be insured, their health status, whether they are a smoker or nonsmoker, whether they have a high-risk occupation, etc. A set fee for policy administration costs is also generally included in your total premium.
It is therefore quite complicated to compare premiums from one institution to another on a uniform basis. For this reason, it is very important to get good advice to ensure that the product you acquire is the right one for your needs and financial resources.
Additional benefits
Companies may offer several additional benefits besides critical illness insurance. To get an idea of what they provide, consult What to Look For in Additional Benefits.
Also in your Insurance Shopping Guide