November 22, 2020

From Chapter 3 of Heal Thy Wealth: How Doctors Are Misdiagnosing Their Own Financial Health And What They Can Do About It.  KINDLE NOW ON AMAZON: click here

Critical Illness Insurance

An estimated 50% of Canadians today will develop cancer in their lifetime, and 25% will experience coronary artery disease, heart attack or stroke. The fact is 90% of disability foreclosures are due to illness, not injury. In referencing the Canadian Cancer Society’s 2015 report, males have a 45% lifetime probability (or a 1 in 2.2 chance) of developing cancer. Females have a 43% lifetime probability (or a 1 in 2.3 chance) of developing cancer. An estimated 225,800 new cases of cancer will be diagnosed in Canada in 2020. More than half (52%) of these will be lung, breast, colorectal and prostate cancer.


Forty years ago, approximately 80% of those diagnosed with a critical illness would die and 20% were treatable and went on to live a normal life. Today, due to advancements in medicine, those numbers have reversed, and there is a higher probability that if you are diagnosed with a critical illness today, and receive treatment immediately, you will survive.  Due to these changing statistics, more than 30 years ago, Dr. Marius Barnard of South Africa developed what we now know as critical illness insurance. Motivated by the financial hardships he witnessed his patients suffering while undergoing treatment, he convinced South African insurance companies to introduce a new type of insurance to cover critical illnesses. On August 6, 1983, the first critical illness insurance policy was launched and has become one of the most recognized plans today.


So what is critical illness insurance? Critical illness insurance is a type of insurance policy that pays out a lump sum once you have been diagnosed with one of the covered conditions and you have survived for at least 30 days since the diagnosis. Healthcare costs are ever-increasing, and waiting lists get longer each year. You want to have choices available to you in order to deal with your critical illness, and having a lump sum of money provides you with options. Over the past five years, major insurance carriers have worked together to standardize the definitions of the critical illnesses covered in the plan, and they cover a variety of major illnesses, such as heart attack, stroke, life-threatening cancer, Alzheimer’s, multiple sclerosis, Parkinson’s, and occupational HIV; the list covers a total of at least 25 critical illnesses. Additionally, certain carriers have included a long-term care feature in their plans called a “Loss of Independent Existence” rider. This rider means that if you cannot perform two out of the six daily activities of living (bathing, dressing, toileting, bladder and bowel continence, transferring, and eating) or have a cognitive impairment, you will also receive a lump sum. Once you receive this payment, there are usually no restrictions on how the money can be spent.


The younger you are, the easier it usually is to qualify for critical illness insurance. I always recommend to my clients to try to put a critical illness plan in place as soon as they can. You might also want to consider placing a critical illness policy on your children while they are young, and then once they reach adulthood, you can transfer the policy into their name. You never know when life will throw you a curveball and make you or your children uninsurable.


From Chapter 3 of Heal Thy Wealth: How Doctors Are Misdiagnosing Their Own Financial Health And What They Can Do About It.  KINDLE NOW ON AMAZON: click here