The
survival factor. Many will survive a critical illness due to advanced
medical technology—75% of those diagnosed with cancer now live longer
than five years. For example: of all women, 11% have a chance of developing
breast cancer, yet of those only 3.8% have a chance of dying from it—meaning
recovery is likely. Similarly, among all men, 11% have a chance of developing
prostrate cancer, yet of those only 3.6% have a chance of dying.
About 90% of hospitalized heart attack victims survive the initial occurrence.
After the first incidence of a stroke, 75% survive.
On average Canadian men live 8.5 years with some form of disability, and
women 11 years. An unpredicted critical illness could mean you need to quit
work, lose your income, or retire early. The risks are very high that your
financial security and lifestyle could be in serious jeopardy during recovery—especially
in a time when the government shifts the burden of paying more of our medical
costs to the consumer. It is expected that seniors over 75, will make up half
of the population by 2040.
Are you prepared for this possibility?
Consider that the annual personal cost for medical care—paid out-of-pocket—is
$38,750 million as of 2004 doubling from 1996—a whopping 5.4% towards
medical care costs and health services combined. Of that consumers spent $13,707
million on drugs and pharmaceutical products. In 2003 the total health-related
expenditures cost the Canadian health system 10% of the gross domestic product.
If you were to experience a critical illness, could you cover the associated
medical and regular day-to-day expenses? Could you face the potential disruption
of a loss of income and lifestyle? Patients suffer many emotional strains
after surviving serious illnesses— not to mention the worries associated
with financial setbacks. The good news is that you can prepare in advance
for the financial consequences relating to a critical illness, by the advance
purchase of an insurance product referred to as Critical Illness (CI) insurance.
How does CI compare with other insurance benefits?
Employee benefits. These usually include life insurance
and some short-term disability income insurance, but do not cover large expenditures
related to a critical illness. The benefits are not portable—and you
do not own the plan—when you change jobs or quit work.
Government benefits. Health plans offered by provincial
governments are not established to help you progressively build an RRSP or
replace your invested wealth depleted by unexpected costs (due to job loss
and overwhelming medical expenses). They only provide basic health care, not
drugs or related pharmaceuticals (costing consumers $13,707 million in 2004).
If one has no money, they may also pay a small disability benefit to subsist
on.
Life insurance benefit. Life insurance is designed to pay
out a lump sum benefit to your dependant survivors when you die. In the case
of a critical illness, you continue to live. The similarity between life insurance
and CI insurance is that a lump sum benefit is paid out. The dissimilarity
is that the CI benefit is directly paid to the insured—to the one experiencing
the critical illness, to utilize while alive.
Life insurance can pay out a living benefit (as it is referred to) in some
cases, if the coverage is provided under the contract and an illness is diagnosed
as terminal. However, a critical illness is not always a terminal illness.
Furthermore, the payment of a living benefit is an advance of life insurance
proceeds and reduces the amount payable to beneficiaries at death.
Disability income insurance benefit. Disability insurance
is designed for income replacement and is important coverage that normally
provides an ongoing income for a predetermined period of time, up to age 65
(in most cases, reduced to 60-70% of pre- disability income). It is designed
to cover normal living expenses when a disability interferes with working—such
as a typist breaking her arm. CI insurance, on the other hand, is designed
to provide a substantial lump sum amount of money up-front to meet the large
additional expenses related to living through a critical illness crisis.
Long-term care benefit. This coverage helps pay for in-home
or nursing home expenses associated with chronic illnesses related to cognitive
or motor impairment when one requires assistance with bathing, eating, dressing,
or toileting.
A CI lump-sum living benefit. "Living"—meaning useable
while you are living—can provide immediate financial independence for
you and your family—some payouts as high as $2,000,000—usually
paid 30 days after the diagnosis of a covered critical illness. Such financial
stability can help you recover in dignity while being able to easily pay for
any necessary medical treatment. The lump sum remains payable regardless how
long the insured survives—and pays regardless of your ability to work.
The breadth of illnesses covered.
What
illnesses are covered? This will depend on the terms of the contract purchased.
Some insurers cover up to twenty different conditions or events. Here are
some of the critical illnesses covered among various plans: Cancer, Coronary
Bypass, Heart Attack, Stroke, Alzheimer's Disease, Aortic Surgery, Benign
Brain Tumour, Blindness, Coma, Deafness, Heart Valve Replacement, Kidney Failure,
Loss of Limbs, Loss of Speech, Major Organ Transplant Recipient, Major Organ
Transplant Waiting List, Motor Neuron disease (ALS or Lou Gehrig's disease),
Multiple Sclerosis, Occupational HIV Injury, Paralysis, Parkinson's Disease,
Severe Burns.
The lump sum benefit is available to meet many associated costs.
Allows more time to convalesce. The CI insurance capital
can help one convalesce with loved ones over longer periods, without initial
concern that the expenses related to a previously enjoyed lifestyle must be
immediately eliminated. There may be an extended time necessary to recover
before one returns to work. Without the coverage you may return to work too
soon, just to cover your bills.
Offers peace of mind. The mind is related to the body, and
stress itself can cause a health crisis over time (for example medical research
has proven that stress increases heart disease). Thus CI insurance may indirectly
help increase the chance of full recovery.
Purchase superior health care. You can afford to hire a
private nurse or care-giver to assist you at home; hire a nanny for the children;
complement your health care alternatives with advanced or speedier treatments
that may be accessible only out of Canada, such as in the USA (consider that
75% of our cancer patients may wait longer than one month for radiation treatment);
make renovations to your home; install medical or therapeutic exercise equipment;
hire a housekeeper; and/or receive advanced physical therapy; install mobility
strategies in your home; purchase a wheel chair or a powered cart; make modifications
to your vehicle; purchase medical assistance devices; or buy expensive drugs.
Financial needs are met. You can pay off a mortgage, replace
lost income, support your loved ones and yourself, pay for child-care and
housekeeping, send your children to college or university, take a vacation
to help you recover; or any other strategy you freely choose—you have
total control as to how you spend your money! There is no need to have expenditures
approved and you don't even need to provide receipts. In fact, you are not
required to spend the money on medical expenses. You might even want to take
that dream trip of a lifetime; or do something you've always wanted to do.
How do I purchase critical illness coverage?
Do I need to currently be in good health to purchase the coverage?
When the insurer considers your application, you need to be in reasonably
good health and not currently living with a diagnosed critical illness. Thus
it is important to establish the coverage while you are in good health.
In some cases, CI insurance can be purchased as a rider on another life insurance
plan. In most cases it is purchased as a policy all on its own. Feel free
to ask us for information about the plans offered.
Summary
Owning
a Critical Illness policy can help you avoid the need to use other funding
alternatives such as a forced liquidation of assets such as your home, or
mortgaging your home, or the premature use of your RRSP or savings. With the
premium costing only a small percent of your income, Critical Illness insurance
can offer piece of mind, providing a tax-free lump sum benefit just when it
might be needed (upon the diagnosis and survival of a critical illness).
Note: As with any policy, the CI contract terms are readily available
for you to read and consider. The figures for the percentages of disabilities
were taken in relation to illnesses referred to as critical from the perspective
of potentially causing death. Many statistics were taken from Statistics Canada
and other reliable sources.
