1.) "I doubt I'll ever need this." (before the decision to purchase)
2.) "Do I have this?" (when a diagnosis occurs)
3.) "I wish I would have bought more…."(when the claim is paid)
This is a common mentality when purchasing insurance, especially as it applies to living benefits like Disability or Critical Illness Insurance.
Recently, our office followed up with existing clients who have not yet incorporated Critical Illness insurance into their financial security planning and to help them take action to do so. It is a thorough and proactive way to make sure that I NEVER have to answer "NO YOU DON'T" to the question #2 (above). Critical Illness insurance is a product that I believe EVERYONE should have, no matter where one might be on the financial independence spectrum.
Perhaps you are not familiar with this type of risk management product or you may already have disability insurance and feel that it is redundant to have Critical Illness insurance. I think it is helpful to compare both products:
Disability Insurance
Your FINANCIAL LIFE SUPPORT. It pays a tax-free monthly benefit for as long as you are unable to work because of any injury or sickness. The monthly benefit essentially replaces the majority of your income when you are unable to work. The benefit is paid monthly and until age 65 (or until you return to work). You receive the benefit based on the demonstration that you cannot work because of your disability. Different policies have different definitions so you need to be aware of how they work which is why it is vital to speak to an advisor that knows about the different types of policies and plan design details.
Critical Illness Insurance
Your FINANCIAL LIFE SAVING AIR BAG that protects you from the financial impact of a major health event. A critical illness insurance payment is a one-time payment and is delivered to you if you have a DEFINED condition set out in the policy. Within the policy there are typically 25 covered conditions and most of the claims that are paid come from the big 3 (Cancer, Heart Attack, and Stroke). Once you receive the lump sum payment from your policy, the contract is done. Alternatively, if you never experience a covered health event, you receive all your money back that you paid into the policy through a feature called Return of Premium. I can't think of any other type of insurance that gives you back all of your money if you never have a claim!
Why Have Both?
-
Many conditions and injuries that can disable you are not covered under a Critical Illness Policy. For example, if you have chronic back problems, major depression, recovering from knee or hip replacement, vertigo, visual disturbances you may have a disability claim but not a critical illness claim.
-
A Critical Illness may not lead to a disability claim. Take Prostate Cancer as an example. Although life threatening, you could typically return to work within a couple of months of treatment or maybe even work through the treatment. Since most Disability policies have a 90 day waiting period (or longer), you would not be able to claim on your disability policy. However, since Life Threatening Cancer is covered under a Critical Illness policy, you WOULD be able to make a claim on your Critical Illness policy and receive the lump sum tax free benefit (anywhere from $50,000 to $2,000,000 depending on how much benefit you purchased). NOW you have some choices. Perhaps you want to take a year off and recover emotionally, spend time with your family, go on a trip around the world. Perhaps some of the treatments available are not covered by Provincial Health or maybe there is a new treatment protocol that is available in Europe. The bottom line is that you have the ability to make those choices as the funds are available!
-
You Could Claim on Both. Picture a "Venn Diagram." In one circle you have conditions that can disable you. In another distinct circle you have conditions that will qualify as a critical illness (i.e. heart attack, stroke, cancer, Parkinson's, MS, Alzheimer's for example. In the middle circle you have a combination of conditions that are both disabilities and critical illnesses. Suppose you were diagnosed with an aggressive form of breast cancer and now you are in a new world of surgery, chemotherapy, radiation. It is a long road ahead maybe a year or 2 before you can be fully functional. In this instance, you would receive your critical illness lump sum payment AND you would receive your disability insurance payments while you are off work. The Critical Illness lump sum takes care of the immediate financial anxiety (‘air bag') and the Disability Monthly payment tax care of the ongoing need for income (life support).
Critical Illness insurance delivers a lot of money at a time when the rawness of a diagnoses is at its most heightened point. It can be such a relief to receive a cheque that says…"You will be ok financially." That particular burden is lifted and you now have the power of financial freedom to focus on recovery and relationships.
This is the power of the product. All that is required of you is to let me help. Call us!
