Critical Illness Coverage - The Missing Piece

It's a fact one out of every three Canadians will contract a life-altering illness during his or her lifetime. And thanks to the miracle of modern medicine, we are now surviving the illnesses that use to kill us.

The Statistics are sobering:

• 1 in 4 Canadians will contract some form of heart disease.
• 75,000 Canadians suffer heart attacks each year.
• 1 in 4 Canadians currently suffer from some form of cardiovascular disease, whether they know it or not.
• 1 in 20 Canadians run the risk of having a stroke before age 70.
• Of the 50,000 Canadians who suffer stroke each year, 75% survive the initial event.
• 60% of the 50,000 stroke victims each year are women.
• There has been a 50% decrease in the death rate from heart disease and stroke over the past 40 years.
• 1 in 3 Canadians will develop a life-threatening cancer.
• 125,000 new cancer cases are reported annually.
• Since 1970 there has been an increase of 1% per year in the incidence of cancer.
• 1 in 4 Canadians will suffer from kidney disease.
• 85% of kidney transplants are successful.

Although most of us have taken the necessary steps to protect our dependants or business in the event of death, how would we cope with the financial and emotional implications of recovering from a critical illness? If we were paralyzed, could we afford to renovate our home to accommodate a wheelchair? Could we pay off our debts? What about special medical equipment or nursing costs? What would happen if we were forced into early retirement? We may be covered for death, but are we covered for living?

The insurance industry has responded to this need for financial protection with the development of Critical Illness Insurance. Marketed by a number of major insurers, the Critical Illness plans typically have the following features:

1. Payout of a tax-free lump sum ranging from $25,000 to $1,000,000 in the event of a critical illness which you survive.
2. The payout is in addition to other medical or disability plans which you may own.
3. The payout is not contingent upon your ability or inability to work during recovery.
4. The plans are available as term plans, or as permanent, lifetime coverage.
5. In the event of death, if there has not been a critical illness claim, some plans return all premiums paid to date to your estate.

Currently, the plans cover the following illness, with more to be added in the future:

• Heart Attack
• Cancer (Life Threatening)
• Major Organ Transplant (heart, lung, liver, pancreas, kidney, bone marrow)
• Coronary bypass
• Blindness
• Stroke
• Deafness
• Paralysis (paraplegia and quadriplegia)
• Kidney Failure
• Multiple Sclerosis

The applications of this kind of protection are obvious, and endless. Consider for example, the following business applications:

Keyman Insurance: If a key person is incapacitated by serious illness, this insurance can provide funding to cover the business income shortfall while that individual is replaced. The lump sum can also help the business if it is forced to operate with the keyperson returning to work on a limited basis after illness.

Buy-Sell Agreements: As with key person, a business may find itself with what is effectively the loss of a partner or key shareholder after a critical illness. This insurance provides ready cash to allow the other partners or shareholders' to buy out the ill party.

Self-Employed: Any self-employed individual faces serious financial problems and a critical illness results in lost time at work. Critical Illness Insurance provides a lump sum of ready cash to cover business overhead, bring in additional help if needed, or otherwise arrange the handling of business affairs.

As well, a spouse at home without personal income can apply for Critical Illness protection. This is especially important when you remember that they would never qualify for regular disability insurance coverage.

No one wants to believe that they will be the one to contract a life-changing illness, but the statistics are clear. Critical Illness Coverage is an idea whose time has come.