Critical Illness: Protects Body and Wallet
So, you've been out shopping like a mad fiend, trying to lay your hands on disability insurance coverage. It's expensive. It's tough to get. You give up. You're never going to qualify! Or, worse, because you're currently not employed (maybe you're a mom or dad at home, or maybe you're just between careers) you can't even apply.
While you may not be able to qualify for that disability plan I've convinced you that you need, I have another suggestion that might be at least a partial solution: critical illness or CI insurance. With this insurance, you buy a policy to cover specific types of diseases and if you're subsequently diagnosed, you'll receive the payout of the amount of coverage you bought.
CI insurance is a relatively new offering, having only come to Canada in 1995. It originated in South Africa in the early 1980s, the brainchild of a cardiologist who watched as the financial stress exacerbated his patients' health problems.
According to the Heart and Stroke Foundation of Canada, one in four Canadians will contract a critical illness by the age of 65. But with the tremendous strides in medical technology, you're far less likely to die. You might even make a full recovery. Thirty per cent of cancer victims are completely cured, while 75 per cent of stroke victims and 95 per cent of heart attack victims survive the initial occurrence. The problem most people face is that lengthy and expensive treatments often mean people don't have the money to get them through the crunch until they can get back on their feet and start earning a living again. And that's where CI insurance fills the gap.
Critical illness insurance pays a lump sum on either the diagnosis of the conditions you've bought coverage on, or their progress to an agreed state. While a heart attack is a heart attack and requires no further definition, multiple sclerosis might not actually impair your lifestyle for many years.
There are no strings attached to the payout -- you're diagnosed and 31 days later you've got a cheque -- so you can use the money in any way you see fit. Are you unsure our overburdened medical system will make space for you? Put your CI money to use seeking private treatment. Or use the money to provide an income while you convalesce. Clear up debts. Keep your small business running. Make physical changes to your home or vehicle. Ready yourself for the rest of your life. It's your money so it's your call how it's used.
The ailments covered aren't the same on every plan. While cancer, heart disease and stroke are pretty standard, there is considerable variance on conditions such as multiple sclerosis, paralysis, kidney disease, loss of speech or hearing, and so on. Look for a plan that covers the highest number of variables. And watch the definitions used for critical illness conditions, which also tend to vary from plan to plan. Don't let the medical terminology baffle you into buying something you don't understand.
Be clear on when you'll be covered and for what.
Buying CI insurance is a lot like buying life insurance except, of course, you don't have to die to collect -- which makes it seem more like "life" insurance than life insurance.
First you select the amount you wish to be covered for. That can range from about $25,000 to the millions. Next, you provide medical evidence of good health.(Be warned: A strong emphasis is placed on your family's health history and a tendency toward a hereditary disease such as cancer could result in its omission from your coverage.)
That, along with your age, your gender and whether or not you smoke gives you an annual premium amount.
That premium ain't no small potatoes either. CI insurance can be expensive. As an offset, policies offer a full refund of premiums to your estate if you die without making a claim.
And some policies have a special rider you can purchase that will kick your premiums back to you if you haven't made a claim within a specified time period.
If you haven't been able to lay your hands on disability insurance, CI insurance can help ease your mind by providing a lump sum payout when you most need it.
And with medical science making life-saving advances in treating major illnesses, this might be the time to insure your wallet, as well as your body.
** written by Gail Vaz-Oxlade and published in the Globe and Mail on Saturday January 6, 2001