Critical Illness Insurance Explained

Why consider Critical Illness Insurance?

The purpose of Critical Illness Insurance is to provide a tax-free lump sum benefit if you’re diagnosed with a covered serious illness. It’s designed to ease the financial pressure that often comes with time away from work, medical costs not covered by government plans, and other unexpected expenses — so you can focus on your recovery, not your finances.

Even if you already have life insurance or workplace benefits, Critical Illness Insurance offers unique protection. Group plans often include only small amounts of coverage, may end if you leave your job, and usually don’t let you choose the benefit amount. A personal policy stays with you and can be tailored to your needs.

What does it cover?

Critical Illness Insurance pays out if you’re diagnosed with one of the serious medical conditions listed in your policy. These commonly include:

Cancer
Heart attack
Stroke
Major organ transplant
Kidney failure
Multiple sclerosis
Paralysis, loss of sight, hearing, or limbs
Alzheimer’s, Parkinson’s, motor neuron disease
Severe burns, benign brain tumour, aortic surgery

Some policies also provide partial payments for early-stage diagnoses. Your advisor can explain the specific definitions and conditions covered by your plan.

What types of policies are available?

Critical Illness Insurance is available in several forms, so you can choose the one that fits your needs and budget. The most common types include:

Term policies: Coverage for a fixed period, such as 10, 20, or 25 years.
Permanent policies: Coverage that lasts for life, as long as you pay the premiums.
Return of premium policies: Refund some or all premiums if no claim is made.
Group plans through an employer: Limited and usually not portable.

Is there a waiting period?

Yes — most policies include a short waiting period after diagnosis, usually 30 days, before the benefit is paid.

What factors affect the cost of Critical Illness Insurance?

The premium you pay for Critical Illness Insurance is influenced by both your personal situation and the policy you select. Understanding these factors can help you plan your coverage effectively:

Age: Younger applicants generally pay lower premiums, since the risk of serious illness increases with age.
Health history: Your medical history, as well as your family history, may lead to higher premiums or exclusions if there are risk factors.
Gender: Rates can differ slightly between men and women because of different incidence rates for certain conditions.
Smoking status: Smokers face higher premiums because of significantly greater risks of illnesses like cancer, heart disease, and stroke.
Lifestyle and occupation: Risky hobbies or high-stress, physically demanding jobs can also impact your cost.
Coverage amount: The larger the lump sum benefit you choose, the higher your premium.
Policy term: Permanent policies tend to cost more than term policies with fixed durations.
Optional riders: Adding features such as return of premium, premium waivers, or child coverage increases your premium.

By working with an advisor, you can balance these factors and find a policy that gives you the right level of protection at a price you’re comfortable with.

Are the benefits taxable?

No — in Canada, Critical Illness Insurance pays a tax-free lump sum benefit you can use however you wish.

How can you use the money?

The benefit is completely flexible. Many use it to:

Cover household expenses while off work
Pay for medications or private care
Reduce debts
Compensate a caregiver’s lost income
Travel for specialized treatment

When is the best time to purchase?

The best time to purchase Critical Illness Insurance is when you’re younger and healthy, so you qualify more easily and pay lower premiums.

How does Critical Illness Insurance fit into your insurance plan?

Most people already include life insurance in their plans to protect their family if they pass away. Many also rely on group disability insurance to replace part of their income if they can’t work due to illness or injury.

But Critical Illness Insurance is often overlooked — and that can leave a gap.

Life insurance only pays if you die, and disability insurance often replaces only a portion of your income, usually with limits and waiting periods. Neither addresses the immediate, unexpected costs of a serious illness, like out-of-pocket medical expenses, travel for treatment, hiring help at home, or paying off debts quickly.

Critical Illness Insurance fills this gap by providing a lump sum, tax-free benefit right after diagnosis, even if you’re still able to work. It complements your life and disability insurance to give you and your family a more complete, well-rounded safety net.

It’s worth reviewing your overall plan to make sure all three pieces — life, disability, and critical illness — are working together to protect your family and your lifestyle no matter what happens.

Critical Illness Insurance provides financial security during one of life’s most challenging times. It’s flexible, tax-free, and tailored to your needs — giving you and your family confidence that you’ll have support if the unexpected happens.

If you’d like help exploring your options or getting a personalized quote, reach out anytime.

Nowadays, people survive serious medical issues such as cancer, a heart attack, or a stroke. And while this is good news if a critical
illness happens to you – your recovery may come with costs that you don’t have the money to cover.

This is where critical illness insurance can play a crucial role. In this article, we’ll explain:

What critical illness insurance is.
What you can use the money from a critical illness insurance payout for.
How you can get critical illness insurance.

What is critical illness insurance?

A critical illness policy is designed to help you pay the costs associated with a serious medical issue such as cancer, a stroke or a
heart attack. With critical illness insurance, your insurance company will issue you a lump-sum payment once the waiting period has passed.

Critical illness insurance can help you pay for costs that aren’t covered by other health plans or disability insurance.

What can I use the money from critical illness insurance for?

With a critical illness lump-sum payment, there are no restrictions on what you can use the money for. You can choose to use the money
to:

Pay down debt or cover costs such as travel to and from your treatment.
Cover lost income for you if you cannot work. This is especially important if you are self-employed.
Pay for a caregiver or lost wages if your spouse takes time off work to be a caregiver.
Cover renovations on your house that are necessary due to your illness.
Cover medical treatments and medications not covered by a government or private health plan.

Being able to spend your critical illness insurance lump-sum payment freely takes a lot of stress off you and your family.

How do I get critical illness insurance?

We can help you get critical illness insurance. If you’re interested in critical illness insurance, these are the steps you’ll need to follow:

Think about why you want critical illness insurance and what kind of coverage you need.
Book an appointment to speak to us. Apply for coverage.
We’ll let you know when you’re approved and deliver your policy.

If you do get any of the illnesses listed in your policy, contact us, and we’ll guide you through the steps you need to file a claim. After your claim is approved, we’ll let you know when to expect your lump-sum payment.

It can be scary to think about getting ill, but critical illness insurance can help put your mind at ease that you’ll have the financial
resources you need. Reach out to us today to learn more!