Critical Illness Insurance in Canada
A critical illness is not something you want to face at any point in your life. Because the risk of getting ill can never be eliminated completely, it’s important to take precautions so that you can make the financial choices required to make a difference when needed most. Securing the right insurance while you’re healthy is one way to cover some of the unexpected expenses that could arise if you become critically ill.
Life-and-death situations are not the only things that policyholders should consider. Even when an ill person lives longer than the elimination period, an Insurer may take some time to determine the eligibility of a claim. For example, it may take time to verify if the claimant knew of the illness at the time of applying for coverage.
Group Critical Illness Insurance: Origins
Critical illness insurance was first developed by Dr. Marius Barnard in 1983 to offset the financial burden associated with developing a critical illness. Medical advances have created an increased need for Critical Illness Insurance, as more people survive life-altering illnesses such as cancer, stroke or heart attack. But these advances in modern medicine have come at a cost – the increased survival rate has strained the Canadian health care system. This, coupled with the fact that many people are naturally seeking extra services and non-traditional forms of treatment, has led to a dramatic rise in cost of care and thus increasing the need for additional coverage.
Group Coverage: Guaranteed at a discounted premium
As mentioned, the cost of care can be prohibitive and exceed what is available in traditional group claims. That’s where Critical Illness Insurance comes in – it pays out a lump sum, tax-free payment upon diagnosis of a critical illness. The money can be used to pay off debts, cover experimental drugs, provide daily living assistance or, depending on the size of the policy, enable you ro seek treatment out of country.
Understanding the need for Critical Illness Insurance is relatively easy; obtaining the coverage can be much more difficult. Individual applications for critical illness coverage are much more closely scrutinized than life insurance applications. The insurance company closely examines the applicant’s health history and family health history. Many individuals may not qualify for coverage based on age, or a medical history that precludes or restricts coverage. By contrast, Group Critical Illness coverage is guaranteed and can be provided at a discounted premium – in many instances up to 30 per cent below that of an individual policy.
As a bonus, some Group Critical Illness plans offer portable coverage. This feature alone is one of the highlights of these policy types. It allows employees who leave their employers to continue their coverage – and retain their group discounted premium.
Group Coverage: A key to attracting and retaining employees
The amount of coverage an individual may qualify for depends on the insurance carrier and the size of the group. From an employer’s standpoint, this can be a major lever in attracting and retaining key employees. Critical Illness coverage bridges the gap found in most traditional employee benefit plans. An example may be a senior executive whose family health history may preclude him from Individual Critical Illness coverage and his Group Disability plan only covers a fraction of his income. A Group Critical Illness plan may provide the leverage needed to lure him from another firm or to keep him with his present employer.
Employees’ Advantage: Portability
Again, a key advantage to the employee is the potential portability of the coverage. An employee retiring at 60 could be faced with extortionate premiums on an Individual Critical Illness policy and the coverage may not even be available due to health issues. However, if the same employee was enrolled in a Group Critical Illness plan, the coverage may be portable and the rates would be based on the employee’s age at the time of enrollment.
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