Critical Illness Insurance or CI has been popular throughout the world for many years. Although it has been available in Canada since the mid 1990's it has only been the last few years that this concept has caught on. CI pays a lump sum benefit upon diagnosis and survival (usually 30 days) of a covered condition such as Heart Attack, Stroke or Cancer. CI benefits are not dependent on your ability to continue working nor does the insurance company stipulate how you must use the funds.
Click here to read some of the statistics on Critical Illness.
Many policies today cover over 20 conditions. Similarly to Disability Insurance, with CI you have to understand the contract and definitions of the covered conditions before you make the purchase. A trained Life and Health Underwriter can assist you in designing the product that is right for you.
Most of our carriers offer...
Most banks offer you this...
YES. You own the policy and you name your beneficiaries.
I pay the premiums, so I would own the policy. Right?
NO.You're part of a group policy owned by the bank. Your bank is the beneficiary.
YES. You choose from your coverage options and the amount of coverage you want, regardless of your mortgage balance. You can increase or decrease your coverage, renew your coverage and covert to permanent protection. If you negotiate or pay off your mortgage or sell your home, you can continue your coverage.
Is the coverage flexible?
NO. Your lender will insure you only for the amount of your mortgage. You can't alter, renew, or convert your policy. If you choose to move your mortgage to another lender, you can't transfer the policy. Your coverage ends when the mortgage is paid off or ends.
YES. Upon death, the benefit goes directly to your beneficiaries. They decide how best to use the money.
Circumstances change. If it's better for my beneficiaries to use the proceeds from the policy for something other than paying off the mortgage, will they have that option?
NO. Upon death, the benefit goes directly to your lender to pay off the mortgage.
YES. Your premiums and benefits are guaranteed for the life of the policy. Only you can cancel or make changes to your policy.
Is the coverage guaranteed?
NO. Your premiums and benefits are not guaranteed. The lender can change or cancel the policy at any time.
YES. The amount you pay for your coverage is based on your age, health, and smoking status.
I look after my health, and I don't smoke. Will that make a difference in the amount I pay for coverage?
NO. Since mortgage insurance is usually provided through a group plan, you pay the same rate for your coverage as everyone else.
The average size policy today in Canada is roughly $100,000.00 or two times annual income. Similar to Life Insurance, CI plan structures can be temporary or permanent. Popular plan designs today are Term 10, Level to 75 or Term 100. An optional benefit called Return of Premium (ROP) is also very attractive as you would get your premium back if you do not claim on the policy (some conditions apply).
With medical technology many people not only survive these critical illnesses, they tend to go on and lead somewhat normal lives. The biggest obstacle when one suffers a critical illness is recovery. Finances will suffer drastically if you or a loved one becomes critically ill. It is recommended to have funds available ranging from 6 - 12 months income to cover daily living expenses in the event of a critical illness.
Contact the professionals at Macnaughton & Ward Financial Services to see if Critical Illness Insurance fits into your financial plan.