A Critical Illness Can Be Financially Painful
Individual Critical Illness Insurance Can Help Financially
Major illnesses are not something any of us want to think about regularly, but preparing yourself and your family for the unfortunate instance one shows up is something our brokers can help you work through.
We have all likely been close to someone who has been diagnosed with a life threatening illness. Did they have insurance coverage to help themselves and/or their family cope with the illness, replace their lost income or pay their medical bills? Many of us have heard of fundraising campaigns for individuals and families affected by major illnesses. Critical illness insurance coverage can help alleviate that extra burden put on you and your family after someone is diagnosed.
Critical illness insurance is simple: it provides a lump sum payout to an individual who is diagnosed with a listed major illness.
As mentioned above, individual critical illness insurance is relatively simple: if you’re diagnosed with a condition listed in the policy, and survive the required number of days, you will receive a lump sum, tax-free payout.
Here are some specific reasons why individuals purchase critical illness insurance:
Of course not all critical illness policies cover the same conditions, but here is a list of the typical conditions which are covered under most critical illness insurance policies:
There are typically 4 different types of critical illness policies available across most insurers:
| 10-year term | 20-year term | Term-75 | Permanent |
|---|---|---|---|
| The premium would stay the same for 10 years, at which time the policy would renew/go up in price no matter the insurability of the individual. | The premium would stay the same for 20 years, at which time the policy would renew/go up in price no matter the insurability of the individual. | The premium would stay the same for the duration of the policy (to age 75) at which time the policy would terminate. | These types vary more so across different insurers, but the basic idea behind permanent critical illness insurance is that the premium stays the same until the insured reaches age 100, and often there are options to pay for 15 years and then no longer pay a premium. Essentially “paying up” the policy. |
There are many different “add-ons” that can be included in some disability policies:
This is always changing, but in a 2019 study1, one insurer showed that the top 3 critical illness claims were for:
That same 2019 study showed the following statistics:
| Women | Men | |
|---|---|---|
| Average age | 53 years old | 55 years old |
| Youngest Claimant | 19 years old (multiple sclerosis) | 6 years old (cancer) |
| Oldest Claimant | 77 years old (cancer) | 76 years old (heart attack) |
| Occupation | Age at time of claim | Reason for claim | No. of months from issue to diagnosis | Benefit paid ($) |
|---|---|---|---|---|
| Nurse | 29 | Kidney failure | 35 | 25,000 |
| Business | 30 | Heart attack | 6 | 200,000 |
| Homemaker | 35 | Cancer | 19 | 100,000 |
| Manager | 52 | Breast cancer | 4 | 50,000 |
2019 study from The Manufacturers Life Insurance Company
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Your Orr Insurance Broker can help you determine the appropriate critical illness insurance for you, provide tips on how to prepare for retirement, and shop the market for the policy options and premiums that work best for you.
Or you can use the email form and one of our representatives will reply as soon as possible.
Which conditions account for most critical illness claims? 