Do you need critical illness insurance?

Recovering from a serious illness can come at a significant cost. If it happens to you, how will you pay for it?

Imagine this: You’ve just been diagnosed with cancer.

While your doctors say your chances of a cure are good, the weeks and months of treatment and recovery you’ll need can come at a high price. Not the surgery or the hospital stay. Not the radiation treatments. Not even the chemo (if they give it to you in the hospital). Those costs are generally covered by your provincial health insurance. But if your spouse has to take several months off work to look after you when you get home, or you’ve been prescribed expensive drugs that provincial health insurance doesn’t cover, or you need months of physiotherapy – you’re on your own.

Where will the money come from? You could raid your savings, run up your credit cards or even borrow against the value of your home – all of which have the potential to derail your plans for retirement. Or critical illness insurance coverage can help leave your retirement plans on track.

Will you suffer a critical illness?

You could. The Canadian Cancer Society says 40% of Canadian women and 45% of Canadian men will develop cancer during their lifetimes, and the Heart and Stroke Foundation estimates there are more than 70,000 heart attacks and 50,000 strokes in Canada each year.

There is good news, however. More Canadians than ever are surviving life-altering illnesses. Some more stats:

  • There are close to 1 million cancer survivors in Canada today, according to the Princess Margaret Cancer Foundation.
  • 80% of heart attack victims and 75% of stroke victims admitted to hospital survive, says the Heart and Stroke Foundation.

The odds are that you or someone in your family will experience a serious medical setback at some point – and survive. But while you’re dealing with your illness, your finances could be suffering, too. For example, research by the Canadian Breast Cancer Network found that 44% of Canadians surveyed with cancer depleted their savings and retirement funds to cover treatment costs and make up for lost income.

How does critical illness insurance work?

If you’re diagnosed with one of the conditions covered under your critical illness insurance policy, after the required waiting period you’ll receive a lump-sum, tax-free* payment once your claim is approved. You can use that money for whatever you want.

If you have disability insurance or extended healthcare benefits through your employer, it’s important to understand exactly what those benefits cover, and for how long. It’s a good idea to review your disability policy or healthcare benefits in comparison with the features of a critical illness insurance plan. Compare:

  • Maximum benefit amounts
  • Deductibles and waiting periods
  • Employment requirements (i.e., you can’t take benefits with you when you leave your job)
  • Percentage of income replaced, and for how long

Wise financial planning takes into consideration not only building your savings, but also protecting it. An advisor can help you to determine how critical illness insurance can support your overall financial plan.

*There are no specific income tax laws for critical illness insurance. Based on current tax laws, Sun Life Financial believes any cash benefit from critical illness insurance will not currently be taxed when the policy is owned by and the benefit is payable to an individual.

© SunLife Financial


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