Individual Critical Illness InsuranceRed Line

Critical Illness Insurance

Preparing for Unfortunate Instances..

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.

Reasons for purchasing critical illness insurance

As mentioned above, 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:

  • Coping: a significant lump sum payout can help individuals and families affected by life threatening illness go on a trip to alleviate stress and cross some items off a bucket list, or even help to purchase something they could not afford before.
  • Income Replacement: being diagnosed with a life threatening illness inevitably means lost time at work. Which means loss of income. The lump sum can help the individual and/or family pay the bills while the person diagnosed gets the help they need
  • Medical Bills: Although we live in a country where anything administered in a hospital is covered by our provincial health plan, that doesn’t mean that you won’t see significant costs outside of the hospital. Anything from prescription drugs to building a wheelchair ramp into your home can put an added stress on you and/or your family during a trying time. The lump sum from critical illness insurance can take that financial stress away.

What is covered?

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:

  • Aortic Surgery
  • Aplastic Anemia
  • Bacterial Meningitis
  • Benign Brain Tumor
  • Blindness
  • Cancer (Life Threatening)
  • Coma
  • Coronary Artery Bypass Surgery
  • Deafness
  • Dementia Including Alzheimer’s Disease
  • Heart Attack
  • Heart Valve Replacement or Repair
  • Kidney Failure
  • Loss of Limbs
  • Loss of Speech
  • Major Organ Failure on Waiting List
  • Major Organ Transplant
  • Motor Neuron Disease
  • Multiple Sclerosis
  • Occupational HIV Infection
  • Paralysis
  • Parkinson’s Disease and Specified Atypical Parkinsonian Disorders
  • Severe Burns
  • Stroke

Types of critical illness 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.

Available “add-ons” for critical illness policies

There are many different “add-ons” that can be included in some disability policies:

Return of Premium on Surrender/Maturity

  • This add-on varies, but typically provides the insured with a lump sum payout of a percentage of premiums paid into the policy upon surrender or maturity (typically surrender has to be the later of the 15th policy anniversary or the insured’s 60th birthday).

Return of Premium on Death

  • This add-on can also vary, but will pay a lump sum to the beneficiary equal to the premiums paid into the policy upon the insureds death.

Disability Waiver of Premium

  • This add-on pays the premium for the critical illness policy in the instance where the insured becomes disabled due to illness or injury.

Non-Life-Threatening Illness

  • This is less common, but some insurers offer an add-on that will pay a certain percentage (often 15%) of the overall benefit if the insured is diagnosed with a non-life-threatening illness. Some of these illnesses include:
    • Chronic Lymphocytic Leukemia
    • Prostate cancer
    • Coronary Angioplasty
    • Malignant Melanoma
    • Ductal breast cancer in situ
    • Thyroid Cancer

Frequently asked questions

Question MarkWhich conditions account for most critical illness claims?

This is always changing, but in a 2019 study1, one insurer showed that the top 3 critical illness claims were for:

  • Cancer: 67%
  • Heart Attack: 13%
  • Stroke: 4%

Question MarkWho is more likely to be diagnosed with a critical illness?

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)

Examples of claims paid:

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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Proudly serving southwestern Ontario, we are local, personal and available – family owned and operated, we live in the communities we serve so we care about our clients. Our job is to find you the best competitive combination of price, value and service from over 60 Canadian insurance and investment companies.

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.

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