One of the greatest financial risks we face during our working years is the loss of our ability to earn an income. Without an income, we might not be able to maintain our family’s standard of living, save for retirement or achieve many of our other financial goals and objectives.
A significant loss of earnings is generally due to a prolonged disability or premature death caused by a critical illness (e.g., cancer, heart disease, stroke, MS, Alzheimer’s). Statistically, over 40% of us will be diagnosed with a life-threatening illness before the age of 75. Fortunately, advances in medicine and technology have significantly increased the chances that we will survive the diagnosis of such an illness.
Fighting an illness and the recovery process come with emotional and financial costs. There are several unforeseen expenses, which can include:
• Basic medical expenses not covered by government or employer-sponsored plans
• Preferred and/or alternative medical treatments
• Home renovations and adaptive equipment
• Child care
• Lost income
Many of us have experienced the financial reality of our healthcare system – it isn’t free, and many costs are covered by the individual, not by Medicare or private insurance companies.
Critical illness (CI) protection will provide a lump-sum cash benefit (from $25,000 to $2,000,000) in the event that you are diagnosed with a qualifying critical illness, and survive for 30 days. These funds are used to pay up-front medical costs, replace lost income, pay off debt, obtain improved medical treatment either in Canada or abroad, or simply take an extended leave of absence from work in order to recover. They can also be used to pay for private nursing or child care, or to modify your home or car to accommodate special needs.
The benefits and options range according to the provider’s contracts. The amount of protection you apply for, your age, health and the type of policy options you choose all have an impact on the cost. Some policies will refund all premiums paid (less any benefits received) when the contract expires or is cancelled (usually after the contract has been in effect for 15 years or at age 65 to 75).
Using critical illness protection to guard against the financial costs of a serious illness can be an important component of your financial plan. The greatest barrier to a healthy recovery from an illness is stress. The biggest source of stress is often a lack of available finances. Critical illness insurance is one simple way to alleviate this stress and promote a better and speedier recovery.