What would happen to you if you got sick and were unable to work?

No one plans on getting sick.

In fact, most of us don’t even want to think about getting sick. Unlike planning for life in retirement or buying a rental property, planning for a critical illness isn’t gratifying or enjoyable to think about.

But if that did happen – if you got critically ill – what would happen to you and your family?

I had a couple in the early 40s come to me for financial planning. They had a healthy emergency fund and had savings for a big trip to Disney in the next year, which their kids were understandably thrilled about. They worked hard and made a good living between them, and they were excited to take their finances to the next level.

During our discussions, I brought up the option of Critical Illness Insurance.

“Oh, we don’t need that. We have disability coverage through work. Plus – we are both healthy as horses!”

But I went through their options with them anyway, and they ultimately decided to purchase a policy.

6 months later, he had a stroke.

Literally overnight, they were faced with both the overwhelming anxiety and uncertainty of his condition itself, and the loss of his income. They would be making frequent trips to the hospital and treatment centre over the coming months, paying for parking, gas, and meals that would all add up to a significant cost. Their house would need to be retrofitted to accommodate his new mobility needs as he recovered. His wife would need to take unpaid time off work to help care for her husband physically and emotionally.

Most of that would not be covered by their disability insurance, or by provincial healthcare benefits.

The tax-free lump sum payment they received from their critical illness insurance meant that they did not have to exhaust their emergency fund or dip into retirement savings while they waited for disability payments to come in. They could explore rehabilitation options based on the benefit to his recovery, not the potential cost. They were able to cover the immediate expenses they faced without worrying about paying their mortgage, too.

In fact, their “Disney vacation” fund remained untouched through his treatment and recovery.

Less than a year after his stroke, they sent me a photo of the entire family – grinning from ear to ear in front of the Magic Kingdom.

So – what exactly IS critical illness insurance?

Critical Illness has been called a ‘Living life insurance’.  Advances in medicine means more and more people are surviving life threatening illnesses, such as heart attack, stroke and cancer. Critical illness insurance allows you to receive a benefit if you suffer from one of the covered illnesses, even if you’re still able to work.

When will I receive my payment?

When you are diagnosed with a critical illness and your claim is approved, your insurance will pay you a tax-free one-time lump sum, typically within 30 days.

Some plans will offer you a 100% return on premium that will be payable to you after the term of your policy comes to an end if you’ve never made a claim.  As well with this rider, if you die before your policy ends and you’ve never made a claim, the premiums you have paid may be refunded to your beneficiary.

How is critical illness insurance different from disability insurance?

Disability insurance provides you a percentage of your monthly income (usually between 50% and 75%) if you find yourself unable to work.  The amount you receive is based on your salary. The coverage ceases once you can earn an income.  Unlike critical illness, there may be a waiting period before you can receive your first payment, and long-term disability benefits may also be affected by other income you receive.

Schedule a call with me to discuss how critical illness insurance can protect your family from the financial and emotional anguish that can come from serious illness.