Critical Illness Insurance provides peace of mind

Imagine you’ve been diagnosed with a serious illness such as cancer or you suffer a heart attack or stroke. Do you have insurance to cover any shortfalls in the income that your family depends on? These days, more and more Canadians are surviving and recovering from the effects of cancer, heart disease or stroke.

Critical-illness insurance provides a lump-sum payment to a policyholder facing cancer, heart attack, stroke and a range of other maladies that varies by contract. The policyholder can use the money for any purpose whatsoever from paying for special treatments or medications to supplementing any lost income during the illness.

It was created almost 30 years ago by the renowned heart surgeon Marius Barnard, who worked on the first human heart transplant with his brother, Christiaan. He became so frustrated watching patients’ financial struggles as he treated them that he convinced insurance companies in his native South Africa to create a product.

Unlike disability insurance, critical illness pays out almost immediately, once the recipient survives the first 30 days.

Most disability contracts don’t pay out for 120 days, and even that depends on the insurance company’s adjudicator, who determines the validity of the claim.

The price of critical-illness insurance has risen over the last five years, by at least 25 per cent. A healthy man in his forties can expect to pay about $100 a month for a contract today, compared with about $80 in 2006.

It’s important to work within your budget when choosing critical-illness insurance. Here are some of the ways to keeping costs down:
* Ask your employer if your company benefits package includes critical illness coverage.
* Look at smaller coverage amounts. There’s no use getting a policy you are not going to be able to afford to keep.
* Buy early. The price rises about 8 per cent for every year an individual doesn’t lock in a contract. Prices become prohibitive once someone hits their late 50s, almost doubling from what they would be for someone in their late 40s.
* Finally, be sure to deal with an independent broker that can shop the market and deal with many critical illness providers. This will help you get the most cost effective pricing and insurance.