“Not because you’re going to die, but because you’re going to survive”
- Dr. Marius Barnard, physician that developed the concept of Critical Illness insurance
Being diagnosed with a critical illness is a jarring life event. Recovering from one can be a personal triumph – but a financial disaster. Recent reports of individuals whose medical costs were not covered through provincial or personal medical insurance plans have caused many to wonder about their financial affairs in the event of a serious illness.
Unlike traditional life insurance that pays a lump sum at the time of death, Critical Illness (CI) insurance pays a lump sum benefit upon the diagnosis of a critical illness, such as cancer, heart attack, or a stroke.
It was designed to help meet the high costs associated with serious illness, and to help you maintain your lifestyle during and after recovery. CI insurance originated in 1983 when a South African physician approached the insurance industry to create a product that would help take care of his patients’ financial issues so that they could concentrate on the most important thing – getting better.
Upon diagnosis of a critical illness, there is a brief waiting period – often as little as 30 days. Once this expires, the policy pays out a lump sum cash benefit. The choice of how to use the benefit is yours, and it is tax-free. Some of the most popular choices include:
- Taking advantage of special treatments, alternative therapies or immediate surgery that may only be available in other countries, such as the U.S.
- Modifying your home or vehicle to meet any mobility requirements as a result of the illness
- Allowing a spouse or family member to take a leave of absence from work
- Reducing overall financial stress
Surprisingly inexpensive, many CI plans also have a feature that can allow you to recover all of the premiums you’ve paid. Having a Critical Illness insurance plan can ensure that if you do fall ill, your medical concerns will not be compounded by financial ones.
Greg Holohan is a Wealth Advisor with ScotiaMcLeod. Greg specializes in unique investment, insurance and retirement strategies, and can be reached at 905.479.8238 or greg_holohan@scotiamcleod.com. ScotiaMcLeod is a division of Scotia Capital Inc., member CIPF. All insurance products are sold through ScotiaMcLeod Financial Services Inc., the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank Group. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Underwriters representing ScotiaMcLeod Financial Services Inc.
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