How much Critical Illness Insurance do I need in 2024?
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Discover the methodologyCritical illness insurance in Canada provides a lump sum payment if you are diagnosed with a specified serious illness like cancer, heart attack, stroke, or others. But then, the question arises, "How much critical illness insurance do I need?" Read on to find out!
In this guide, we take you through everything you need to know about how much critical illness coverage you need, how to calculate it using our free critical illness insurance calculator, and more.
You can also use our free comparator to explore the best critical illness insurance plans in Canada, compare the benefits, and get free personalized quotes right here in no time.
Critical Illness Insurance: 5 Key Takeaways
- Critical illness insurance is supplemental health coverage.
- It provides a lump-sum benefit upon diagnosis of covered major illnesses.
- The number of covered conditions can range from a few dozen to over 200.
- The amount of insurance needed depends on several factors.
- When determining coverage, consider various expenses like medical and living.
What is critical illness insurance?
Critical illness insurance (also known as CI or dread disease insurance) is a type of supplemental health insurance designed to provide financial protection in the event of a major illness.
The beneficiary gets a lump-sum benefit upon diagnosis of a covered critical illness. This benefit can be used to cover a variety of expenses, including:
- Medical bills not covered by other insurance
- Loss of income
- Living expenses
- Alternative or complementary therapy
Before we get into further details, you can quickly take a look at our free comparator tool below to choose among the three best quotes on critical illness insurance from multiple Canadian providers right here in no time.
If you're still wondering if critical illness insurance is worth it, here are some of the key features of critical illness insurance:
- Lump-sum benefit: Upon diagnosis of a covered critical illness, the insured receives a lump-sum payment directly from the insurance company. This payment can be used for any purpose, including covering medical bills, lost income, and living expenses.
- Wide range of covered critical illnesses: Most plans cover a wide range of critical illnesses, such as cancer, heart attack, stroke, kidney failure, and multiple sclerosis.
- Guaranteed benefit: Once you are diagnosed with a covered critical illness, the insurance company is obligated to pay you the full benefit amount, regardless of your pre-existing health conditions.
- Tax-free benefit: In many cases, the lump-sum benefit from critical illness insurance is tax-free.
What does critical illness insurance cover?
The specific coverage varies from policy to policy. However, most plans cover a wide range of critical illnesses, including:
- Major Cancers: This includes most types of cancer, such as breast cancer, lung cancer, colon cancer, and prostate cancer. Some plans may also cover rarer forms of cancer.
- Heart Disease: This includes heart attack, stroke, coronary artery disease, and congestive heart failure.
- Neurological Disorders: This includes Multiple Sclerosis (MS), Parkinson's disease, and Alzheimer's disease.
- Organ Failure: This includes kidney failure, liver failure, and lung failure.
- Other Critical Illnesses: Some plans also cover other critical illnesses, such as blindness, deafness, and burns.
Good to know
The number of covered critical illnesses varies by plan. Some plans may only cover a few dozen conditions, while others may cover more than 200.
Some critical illness insurance plans also offer additional benefits, such as:
- Children's coverage
- Return of premium
- Dismemberment benefit
How much critical illness insurance do I need?
Determining the amount of coverage you need in Canada depends on various factors, including your age, health, income, family situation, and financial goals.
Here are some general guidelines to help you get started:
Minimum Coverage
- Young adults: $25,000 - $50,000
- Adults with families: $100,000 - $250,000
- High-income earners: $500,000 - $1 million
Expert advice
Understand how each covered illness is defined in the policy. This will help you determine whether your specific condition will be covered.
What expenses do you need to cover?
The amount of critical illness insurance coverage you need depends on several factors, including:
Medical expenses: $40,000 average amount
- Out-of-pocket costs: Consider deductibles, copays, coinsurance, medication costs, and potential costs for non-covered treatments or alternative therapies.
- Hospitalization expenses: Estimate potential costs for room charges, surgery fees, doctor fees, diagnostic tests, and post-operative care.
- Rehabilitation costs: Factor in potential expenses for physical therapy, occupational therapy, speech therapy, and cognitive rehabilitation.
- Durable medical equipment: Account for potential costs of wheelchairs, walkers, prosthetics, oxygen tanks, hospital beds, etc.
Living expenses: $15,000 average amount
- Financial obligations: Consider mortgage or rent payments, utility bills, grocery expenses, transportation costs, and other essential living expenses.
- Debt repayment: Factor in any outstanding loans or credit card debt to ensure financial stability during treatment and recovery.
Lost income: $15,000 average amount
- Salary or wages: Estimate the potential loss of income during your recovery period and the impact on your financial stability.
- Business income: If self-employed, you need to consider the potential impact on your business income and its ability to sustain itself.
Home modifications: $10,000 average amount
- Accessibility modifications: Evaluate the need for modifications to stairs, bathrooms, doorways, and living spaces to facilitate daily living activities.
- Specialized equipment: Consider the potential cost of installing chair lifts, grab bars, ramps, or other specialized equipment.
Caregiver expenses: $10,000 average amount
- In-home care services: Estimate potential costs for assistance with activities of daily living, bathing, dressing, and meal preparation.
- Nursing home or assisted living facility costs: Factor in potential costs for long-term care if needed.
Travel expenses: $10,000 average amount
- Medical travel: Consider potential travel costs associated with visiting specialized medical centers or receiving treatment at distant facilities.
- Accommodation and transportation: Include potential costs for accompanying family members during medical travel.
What is the cost of critical illness insurance in Canada?
How much you'll pay for the insurance hinges on several factors, including the coverage amount, budget constraints, health status, family considerations, and preferred coverage duration.
- Certain insurers, such as BMO Critical Illness Insurance, extend discounts to non-smoking adults.
- The range of illnesses covered varies among providers, with some offering comprehensive coverage (around 26 illnesses).
- Others, like Canada Life, focus on the major four: heart attack, cancer, stroke, and coronary artery bypass surgery. Specialized cancer coverage is available from providers like iA (Industrial Alliance).
To provide a general idea of potential costs, here is an overview of typical monthly premium ranges based on different coverage amounts:
| Coverage Amount | Monthly Premium Range |
|---|---|
| $50,000 | $20 - $70 |
| $100,000 | $30 - $100 |
| $250,000 | $50 - $150 |
| $500,000 | $80 - $200 |
These figures are approximate, and actual costs may vary depending on individual circumstances. For accurate pricing tailored to your specific needs, it's advisable to request personalized quotes from insurance providers.
While contacting each provider to get quotes might be a time-consuming process, we've made it simple for you. Just use our free comparator below to compare the best critical illness insurance policies in Canada, compare their coverage, and get free personalized quotes right here in no time.
Find a critical illness insurance policy that's right for you
How to calculate the coverage you need?
Many insurance companies offer online calculators to help you estimate your coverage needs. Alternatively, you can consult a financial advisor or insurance broker for personalized guidance.
You can even use our critical illness insurance calculator to l to determine the appropriate amount of coverage for your needs.
Here’s how:
- Begin by entering your monthly income and specifying the coverage duration in months.
- To obtain a quick estimate, multiply your monthly income by the desired coverage period.
- Consider additional expenses associated with illness.
- Take into account costs such as transportation to and from the hospital, the installation of home accessibility aids, and more.
- Evaluate the portion of your savings accessible during a critical illness and determine the amount you are willing or able to utilize.
- Lastly, factor in any existing disability insurance or life insurance policies you currently hold.
How much critical illness insurance coverage does a stay-at-home partner need?
While a stay-at-home partner doesn't generate regular income, they play a crucial role in maintaining the household and caring for family members. Therefore, critical illness insurance for stay-at-home partners can be incredibly important in Canada.
The coverage amount will depend on the following factors:
- Medical expenses
- Living expenses
- Childcare costs
- Home support services
- Lost income from working partner
Weigh in all these factors to calculate to coverage amount you might need. Use our calculator to save time.
Good to know
Stay-at-home partners with pre-existing health conditions may face higher premiums or limited coverage options.
How much critical illness insurance coverage does a child need?
Critical illness is not as common in children as in adults, but it's still important to consider this insurance for your child. A lump-sum benefit from this insurance can be crucial in covering medical expenses, lost income for parents, and other associated costs, ensuring your child receives the best possible care without financial strain.
- For young children, coverage amounts of $25,000-$50,000 can be a good starting point.
- As your child grows older, consider increasing their coverage amount accordingly.
- Some experts recommend coverage equal to 10 times the child's annual income.
- Others suggest covering potential lifetime medical and living expenses.
Ultimately, the ideal coverage amount depends on your circumstances, financial needs, and risk tolerance.
Investing in critical illness insurance for your child provides peace of mind and ensures they receive the best possible care if they face a serious illness. Make sure to explore available options to get the best coverage. You can use our comparator for the same.
