What is
Income Protection?
How Critical Illness Insurance Works
Critical illness insurance does not have to be as difficult to understand as most people make it out to be. Essentially you purchase a policy and if you are diagnosed with one of the covered conditions, the insurance company will send you a cheque, tax free which you can spend anyway you wish. There are no limitations on the way you are able to spend the money. It is 100% yours and you can do what you wish with it.
If you are considering purchasing a critical illness insurance policy, there are a few things that we need to figure out first…
Coverage Amount. How much money do you require, tax-free in the event that you are diagnosed with a critical illness and could not work for the next 6-12 months? A lot of people will apply for their annual income as the coverage amount as it would allow them to take at least one year off of work. This amount is different for everybody though.
Policy Type. There are different policy types available (just like life insurance). Do you need coverage for 10 years? Do you need coverage until retirement? Do you need coverage for your entire life?
Insurance Company. Once we know how much coverage you are looking for and the policy type, we can start comparing insurance companies and pricing to determine who to apply with.
Benefits of Critical Illness Insurance
There are many benefits in purchasing critical illness insurance which is why it has become a very popular insurance product in Canada.
- Peace of Mind. Provides the peace of mind knowing that you will receive an injection of lump sum, tax free cash in the event of a diagnosis of a covered condition.
- Comprehensive Coverage. Policies can provide insurance protection for up to 25 conditions. The main three conditions are heart attack, stroke and cancer.
- Policy Options. There is a wide range of policy types and coverage amounts available to choose from the top insurance companies in Canada. We can compare pricing from multiple companies to ensure that you are getting the right product at the lowest possible price.
- Tax Free Benefit. If you make a claim, the insurance company pays your benefit amount out to you tax free.
- No Limitations. You can spend the money from a claim however you wish- there are no limitations or restrictions on how you are able to spend the money from a claim.
- Customization. Policies are very customizable which allows you to ensure that is suits the needs of you and your family. Need an affordable premium to start? Consider a 10 year term. Looking for long term coverage until retirement? Consider coverage to age 65 or 75.
- Return of Premiums. Yes, you heard right. There are a handful of insurance companies in Canada who will provide you with 100% of the premiums that you paid back if you never make a claim. This does come at an added cost but it could be a great way to provide insurance protection with a savings component involved.
- Renewable. The majority of critical illness insurance companies offer a renewal option within the policy.
- Convertible. The majority of critical illness insurance companies offer a conversion option within the policy.
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