Stay Paid up While You’re Laid up With Critical Illness

We all know why we have insurance. It protects us from events which are unexpected and undesirable. It protects us from experiencing financial hardship during times when the unexpected becomes a reality and allows us to deal with these unforeseen events without worrying or struggling with finances.

When thinking about the potential of suffering from a critical illness, there are several things to consider.

• Will I be able to work while suffering from a critical Illness?
• If not, do I have a plan to cover my expenses while I’m recovering?
• How likely is it that I will get a critical illness?
• How long will it take to recover?
• Will I ever fully recover?

These are just a few things to think about, but they’re definitely the bigger concerns for most people. When we consider the question of how likely it is, it makes sense to look at things like hereditary diseases. If some diseases are common amongst two or more members of your immediate family, it might make sense to assume you have a strong chance of being burdened with that disease as well.

Protection From The Unexpected

Obviously, the other thing we can look at is statistics. How commonly do you hear about people getting sick with a particular affliction? What is the ratio of people who suffer from a critical condition vs. those who do not? More importantly, what is the ratio of people who never suffer from a critical condition vs. those who suffer from at least one?

You can find all sorts of statistics, but what do you trust? There are two well-known stats that I hear over and over. Sadly, the more I hear them, the more it seems to be true.

1. 1 in 2 Canadians will develop some form of cancer in their lifetime.
2. The top 3 causes for a Critical Illness claim are Cancer @64%, Heart Attack @21% and stroke @4%.

So, if the odds of getting a critical illness are more likely than not getting one, are we really preparing for an unforeseeable event? Considering that 50% of the people out there will get cancer at some point in their life and that if they don’t, they’re likely to get something else, I’d say not.

Planning for The Conceivable

Critical Illness Insurance isn’t protection for the “Just in case”. It’s really more like planning for the likely events which are unfavourable. Think of hail insurance. You have it on your home, you have it on your car, farmers have it on their crops. Why? Do you ever put in a claim for it? How often does it hail? Well in reality, it hails all the time, but not always where you are. It’s never a question of whether it will hail, but more of when and where. So, we don’t just protect ourselves from a chance of hail. We plan for the inevitable hail.

Critical illnesses are the same. It’s not just protection from something that might happen. It’s a mitigation plan for something that most likely will happen. Like a hailstorm, we’re protecting ourselves from it because it’s not as much a question of whether it will happen, but when and where. When in our lives will it happen? Where will we be when it happens? Will we be trying to raise a family or trying to put kids through college? Will we be in the middle of a vacation and suddenly need to travel home? Maybe it happens at the age of 65. Just finally trying to enjoy the retirement we worked so hard for. Who knows? Not me and not you, but you can at least be certain that when it does, you’ll be ready for it.

Covered Conditions

Once you’ve decided to take out a Critical Illness policy, make sure you’re aware of what it covers. Most policies will cover about 20 to 25 conditions, but they all have their own tailored version of what is covered and what is not. As your advisor, it’s my job to make sure you understand those conditions. If it is my distinct displeasure to not be your advisor, I’m certain the one you are using will do the same for you. If you’re not sure about that, you can always talk to a few other advisors and make sure of it. In the meantime, let me tell you about some of the general conditions that you should see on all policies.

Most policies will list Covered Conditions in the definitions section, so be sure to review it closely. If you can’t find a condition in this section of your contract, it is likely not covered. In most cases, a Critical Illness Policy will include things like:

• Aortic Surgery
• Terminal Cancer
• Blindness
• Benign Brain Tumours
• Heart Attack
• Heart Valve Replacement
• Loss of Limbs
• Paralysis
• Coma
• Coronary Artery Bypass Surgery
• Deafness
• Loss of Speech
• Major Organ Transplant
• Stroke
• Severe burns

Bear in mind that this is just a short list. Most policies will include much more than this and should be reviewed very closely upon delivery. When you review your policy make sure that it covers everything as expected. If anything is missing, review it with your advisor right away. If you’re not able to review it with your advisor, contact the customer service of the insurance company and talk to the underwriting department. Whatever the case, understand your policy.

Partial Covered Conditions

There are some other conditions that, although not as severe, still interfere with day to day life. They may be conditions which are not life-threatening or perhaps were detected early enough to take preventative measures before they become a major threat. These conditions can still be covered, but typically only at a partial rate. For example, if an individual were to be screened for prostate cancer and find it in the early stages, there is an opportunity to act on this and get treatment to avoid a life-threatening situation. The insurance company will typically pay a benefit on a claim like this at a small percentage of the overall benefit value. This value ranges from 10 -25% depending on the insurance company.

Once a claim in this category is paid out, the policy remains in force, but the insurance company will then only pay up to the difference on any further claims. Let’s say, for example, an individual has a Critical Illness Policy for $100,000. After having the policy in force for a few years they are diagnosed with Stage A Prostate cancer. After submitting a claim with the doctor’s report, this individual is paid a benefit of $15,000 (15% of the total face value). The policy remains in force afterward and the individual is still insured up to $85,000. A few years later the individual is involved in a major accident in which the use of two limbs is lost. After submitting a claim, the remaining $85,000 is paid out.

Critical Illness Insurance Is for Everyone!

So now you’ve read this far. You read all that because it was of interest to you, but why? Most people who ask me about Critical Illness Insurance are doing so because their lives have been affected by a critical illness. Whether directly or indirectly, they have seen the value of these policies because they have suffered from a critical illness or they know someone who has.

In any case, they now know that it can happen to them and they want to know more about how to protect themselves and their family. Either they’ve seen the financial hardship which is endured on the road to recovery and they see how these policies would have helped, or they had a policy in place, and they can see how they would have struggled with out it.

The question now, is whether you can qualify for a Critical Illness policy. In most cases the medical underwriting that goes into a good critical illness policy is very stringent. Historically many people wouldn’t qualify. Things have changed in the industry, as they always do, and polices have become a little easier to attain. If you’ve put off getting a policy because you’re a cancer survivor, you can stop that. If you’ve looked into getting one in the past but didn’t qualify due to diabetes, you’re going to be pleasantly surprised.

There are many new products these days in terms of Critical Illness Insurance. Some are fashioned in such a way that even if you’ve survived a critical illness recently, you can still get coverage for other conditions. Some of them are even guaranteed issue. The underwriting is completed upon application and there is no concern with what your medical history has been. Take note, that there will be exclusions to anything pertaining to your pre-existing condition on these policies. If you have any critical conditions in your history there will either be an exclusion for those or possibly a 24-month survivability period.

As well, something else has changed recently. In the past there has never been a Critical Illness policy for children, but why not? If you’ve lived your whole life with diabetes, you’ve likely run into all sorts of issues when it comes to getting any kind of insurance. Think of how much easier it would have been to have that insurance in place when you were a youth. You would have never needed to answer a medical questionnaire again, because you would have already been covered. Why not make sure your children can take advantage of that liberty? Putting a Child Critical Illness rider on your policy will grant them that advantage. Having this insurance in place at a young age guarantees them insurability later on in life.

Get your Plan in Place

If you’ve read through this article and still don’t see the need of a Critical Illness Insurance policy, you must be invulnerable to sickness. There are those lucky individuals out there who never experience any sort of illness their whole life and have never had a family member experience it either. Is this you? Are you perfectly healthy with no concern for any illness in your future? Have all your family members been healthy their whole lives and never had to worry about sickness? If so, congratulations! You’ve won the health Lottery. Not many people can say that, no matter how much they incorporate healthy living into their lifestyle.

If you are thinking about a Critical Illness policy on the other hand, don’t delay. I’m glad to say that I’ve only seen a few cases where people have contacted me all to late about getting covered with this insurance. Remember, you can’t buy hail insurance after you get hailed on. Critical Illness insurance is no different. Get the plan in place before the worst happens. You’ll be glad you did.