While the emotional and life ramifications of being diagnosed with a critical illness can be devastating, so too can the financial consequences. Those affected are suddenly faced with a loss in earnings, which usually compound with costly outlays ranging from medical bills, treatment plans, transportation costs when seeing specialists and potential housing accommodations, among others. Critical illness insurance is a powerful service that can reduce the financial strain faced by those diagnosed with serious illnesses.

Critical illness insurance differs from disability insurance. The latter generally provides a recurring monthly income for a certain number of years, and usually takes longer to commence. On the other hand, critical illness insurance offers the insured – another term for the policyholder – a single lump sum payment should they survive the first 30 days following their diagnosis. The cash value paid out to the insured can be used to cover the expenses that arise, replace lost earnings, or be used in any way the policyholder chooses. The value of the payout depends on many factors, from age, gender, health and family history. Different policies also cover different definitions of illness; this can be reflected by the premium charged.

What constitutes a critical illness? In general, most policies tend to cover cancer, heart attacks and stroke at the minimum – which amount to roughly 80% of claims according to The Globe and Mail. Individuals should be sure to understand what illnesses are covered and the different clauses associated with their policies. The Globe also highlights that the monthly premium of a critical illness policy for a healthy man in his 40s costs about $100; a 25% increase from the amount a man in the same range – healthy and his 40s – would pay in 2006. This can be attributed to a demand for critical illness insurance, and a need to understand two simple factors.

First, critical illness insurance can be thought of as a type of contingency fund for the unfortunate circumstances many people undergo. Unlike disability insurance, the insured does not have to be rendered disabled or be unable to work. For those with a lower risk of becoming disabled either on the job or at any point in life, critical illness policies offer a more relevant risk management service that protects them from factors more likely to affect them.

Second, critical illnesses are becoming more common on an annual basis. According to the Canadian Cancer Society, 1 in 3 Canadians will develop cancer in their lifetime. Referring to The Heart and Stroke Foundation, we learn that 75,000 Canadians suffer from heart attacks annually with 1 in 2 being under the age of 65. Citing the same source, 50,000 Canadians suffer strokes annually, with 75% surviving the initial attack. Those who survive are at risk of developing neurological disability – of which stroke is the leading cause. In fact, 60% of stroke victims are left with long-term disabilities.
Statistics Canada also reports that the top three causes of death among Canadians – across
both genders – are cancer at 29.8%, heart disease at 20.7% and stroke at 5.9%. Combined, these critical illnesses represent 56% of all deaths in Canada. Should an insured be afflicted with any of these illnesses and survive for at least one month, they would receive the lump sum payout.

While the commonality of these illnesses continue to rise, a well-defined contingency plan, made possible through critical illness insurance, can provide the means to withstand the financial side effects; while potentially providing access to better, more proven solutions.

The financial advisors at GTA Wealth Management Inc. can help you understand critical illness insurance, develop a customized contingency plan, and tailor it towards your portfolio. For more information about what risk management and it's importance to your financial health and security, please visit our risk management section.

GTA Wealth Management Inc. offers a fee initial consultation. Our Financial Advisors would be happy to help you with your risk management strategies and review your financial portfolio. Contact or call GTA Wealth Management toll free 1 855 GTA WLTH (855 482 9584) to accelerate your ride to financial independence. A professional wealth management financial advisor is ready to serve your wealth management, tax return and planning needs. GTA Wealth Management Inc. has three convenient locations in Mississauga, Toronto and Markham to serve you.