People are now doing what once seemed impossible, surviving critical illness. Now, they can even combat the financial burden of a serious illness with Critical Illness Insurance. While saving one’s life is certainly worth the cost, it is nice to know it is not necessary to break the bank.
Critical Illness Insurance is a more recent addition to group benefits and was not always part of a traditional group benefits plan. Critical Illness Insurance is a lump sum benefit that an insurance company pays out to a person with a serious critical illness such as cancer, heart attack, stroke and up to 26 other illnesses if the illness meets the criteria.
After surviving 30 days from this illness and applying for the benefit through the claim process, the insurance company will pay the funds in a lump-sum, tax-free cheque to the employee. In some cases, if set up by the employer in advance, an insurance company will pay dependent coverage to a spouse and or the children if the policyholder becomes critically ill.
A person can apply for Critical Illness Insurance as they do Life Insurance. Primarily, the insurance company bases the process on the person’s family history, such as parents and siblings. Typically, if there is a problem with health in the family, the company does not simply decline coverage. The insurance company often can and will make an offer.
For example, if the person wants $50,000 of coverage and the cost is $60/month, the provider may return with an offer of $40,000 for the same rate of $60/month.
Some companies also offer a guaranteed issue policy. This one has the pre-existing condition clause 12/24. This means that they will not cover a condition that has been an issue within the last 12 months until it has been clear for a period of 24 months. For instance, cancer, cardiac, or health-related testing that a company considers a life-threatening illness.
*Critical Illness Insurance offers peace of mind when a person or a loved one becomes seriously ill, and the funds are completely tax-free.
Having Critical Illness coverage protects a person’s investments, as well. When a serious illness strikes a person or their family member, the first place people go for additional funds is their bank account (i.e. savings/chequing). When that runs low, they jump to their investments (i.e. RRSPs/TFSAs). Critical Illness Insurance on the life of the ill member takes the burden away, keeps the investments in-tact, and frees the family to focus on caring for their loved ones.
Over the years, we have witnessed families with Critical Illness coverage make a full recovery. The additional funds were a large part of significantly reducing the family’s stress levels. Critical Illness policies can help to lessen the burden on the life savings of a family, with coverage from $10,000-$500,000 or more. Critical Illness Insurance is a wonderful addition to one’s overall financial plan.
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