What are the best critical illness insurance providers in Canada?

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If you are lucky, you will never need critical illness insurance. Maybe you have never even heard of it. But in the event of a big health emergency, such as cancer, heart attack or stroke, critical illness insurance could be the only thing protecting you from complete financial ruin. 

Did you know that standard public and private health insurance plans, do not cover all the costs of some life-threatening illnesses? The costs of specialized treatment can be more than any plan will cover.

Read on to learn about critical illness insurance and whether it is right for you and your family.

What is critical illness insurance?

For many Canadians, especially those who are young and healthy, the thought of experiencing a critical illness like cancer, heart attack or stroke is all but impossible.

Critical illness insurance provides additional coverage for medical emergencies such as heart attacks, stroke or cancer. Because these emergencies or illnesses often incur greater than average medical costs, these policies pay beneficiaries cash to cover where traditional health insurance may fall short. 

As the average life expectancy continues to increase, providers are finding ways to make sure you can afford the privilege of getting older. 

Even with an excellent health insurance plan, a critical illness can be a tremendous financial burden. Critical illness insurance provides coverage if you experience one or more of the following medical emergencies:

  • Heart attack
  • Stroke
  • Organ transplants
  • Cancer
  • Coronary bypass

Because these illnesses typically require extensive medical care and treatment, their costs can outstrip a family’s health insurance policy quickly. While Canadian healthcare covers many costs, expensive prescriptions, private specialists and tests are often not included. 

Critical illness insurance can pay for costs not covered by your traditional health insurance plan. The money can also be used on non-medical expenses related to the illness, including transportation and family support. 

Sadly, critical illness is not uncommon. According to the World Health Organization (WHO), an estimated 17.9 million people died from cardiovascular diseases in 2019. This represented 32% of all global deaths! 85% of these deaths were caused by a heart attack or stroke.

How does critical illness insurance work?

Critical illness insurance pays a lump-sum benefit amount following the diagnosis of a covered condition in exchange for a monthly fee.

Medical advances have made it so that those diagnosed with a serious illness live longer. However, with medical advances also come significantly increased healthcare costs. 

You can use the benefit amount from a critical illness insurance policy to help cover medical bills associated with your diagnosis, including medical treatments not covered by a traditional health insurance plan. It can also help cover daily living expenses such as your mortgage, child care costs or groceries. If you require transportation to and from medical appointments, you can use your payout to cover those costs. Critical illness insurance exists so that when you are faced with serious illness, you do not have to stress about making sure bills are paid and your family is taken care of but can instead focus solely on your recovery. 

What are return of premium benefits for critical illness insurance?

You can add on a rider on many policies for a return of premium for your critical illness insurance policy. If you add a return of premium rider, your policy works just like a normal policy - you pay the monthly premiums and the policy coverage continues. If a covered critical illness occurs, the policy pays out.

However, with a return of premium rider, an insurance provider pays back a portion or all of the premiums under certain circumstances, such as if no claims have been made when the policy expires or the policyholder dies. 

What does critical illness insurance cover?

The list of covered illnesses that are eligible for critical illness insurance coverage ultimately vary from provider to provider, but some of the most common illnesses that would trigger a payout are: 

  • Heart attack
  • Stroke
  • Organ transplants
  • Cancer
  • Coronary bypass
  • Renal failure
  • Paralysis
  • Loss of limb

A big draw of critical illness insurance is that the money can be used for a variety of expenses, such as:

  • Critical medical services that might otherwise be unavailable.
  • Treatments or specialists not covered by a traditional policy.
  • Daily living expenses, enabling the critically ill to focus their time and energy on getting well instead of working to pay their bills.
  • Counselling services to assist in coping mentally with the diagnosis.
  • Transportation expenses, such as getting to and from treatment centres, retrofitting vehicles to carry scooters or wheelchairs, and installing lifts in homes for critically ill patients who can no longer navigate staircases.
  • Terminally ill patients, or those simply in need of a restful place to recuperate, can use the funds to take a vacation with friends or family.

What does critical illness insurance not cover?

While critical illness insurance pays many costs associated with a covered illness, some conditions and services are not covered. 

Critical illness insurance policies do not generally cover chronic conditions like diabetes, asthma or multiple sclerosis. They also do not cover pre-existing conditions or conditions related to drug or alcohol use. 

You will want to make sure you review your policy thoroughly to confirm what is covered and what is not covered. 

Is critical illness insurance worth it?

Are you considering a critical illness insurance plan, but you are wondering, is it worth it? 

The short answer is: yes.

Critical illness insurance is a lifesaver if you do not have enough money to cover expenses if you fall ill. Even if you have a substantial financial cushion, do you want to eat away at your hard-earned savings on an illness? This type of policy will provide a cash payment to help you avoid a major financial loss. The money provided by the policy can pay for out-of-pocket health care costs related to the critical illness or cover household expenses while the insured recovers.

How much critical illness insurance do I need? 

As a rule of thumb, experts in Canada recommend a minimum of 60 months of your take-home salary. This is the average amount of time it takes to recuperate from a serious illness. 

Using that rule, if your monthly net income is $3,000, you would want approximately $180,000 in coverage. 

To determine how much critical illness insurance coverage you need depends on how much of a payout you would need if you were diagnosed with a covered illness.

Such expenses could include:

  • Mortgage or rent payments
  • General household expenses like electricity, gas, water, groceries
  • Debts: Do you have loans, car payments, credit card payments?
  • Childcare or family commitments:

Lastly, consider the medical expenses you could incur. You may face an illness that requires clinical trials or services not covered by your health insurance plan. You could, for example, even have to renovate your home to make it wheelchair accessible or hire an in-home nurse.

All of these things will factor into determining how much critical illness insurance you will need to make sure that all of your bases are covered. 

You will want to consider how much money you would need to provide for your children and family if you could no longer work due to illness.

Pros and cons of critical illness insurance?

Insurance plans are there for protection when the unexpected happens. When it comes to critical illness insurance, the pros outweigh the cons. Gain peace of mind and financial flexibility is the worst happens.

Pros

  • Peace of mind. If you don’t have substantial savings, critical illness coverage is reassuring. The payout can be a source of income for you and your family.
  • Spend the payout however you like. You will get a lump sum payout.
  • Care for dependants: Critical illness coverage can help you continue supporting children or other family members that rely on you financially.

Cons

  • Not all illnesses are covered. Make sure you check exactly what illnesses are covered with your insurance provider. Even if your illness is listed, whether it is covered will depend on its severity.
  • Coverage and the prices vary. Besides differences from provider to provider, your health, age, smoking status and lifestyle can significantly impact the affordability of critical illness insurance.

How much is critical illness insurance?

Your critical illness insurance rate will entirely depend on your circumstances such as age, health status and lifestyle.

In 2020, the average monthly premium for $25,000 in critical illness insurance coverage depending on age group were:

AgePrice per month
Under 25$7
51 to 55$27
56 to 60$44
61 to 65$56
Critical insurance premiums by age

What is the best critical illness insurance in Canada?

Which critical insurance provider and policy is best for you depends on your situation, your risk tolerance, your age, health and ability to pay. 

Here are some commonly searched critical illness insurance providers in Canada:

What is children’s critical illness insurance?

Children’s critical illness insurance allows you to maintain an income if you need to take a leave of absence from work to focus on your child’s care and recovery. 

Much like critical illness insurance for adults, it will also pay for additional expenses, including treatments and prescription drugs not covered by a provincial healthcare plan as well as travel expenses if you have to travel to seek healthcare for your child.

A sick child is something no one wants to think about. However, in the event of an illness or injury, you will want not only your child to have the best access to medical treatment, but also want to be sure that you can be present for your child. 

What is the difference between critical illness vs disability insurance?

You now know that critical illness insurance coverage can be used to cover your bills and general living expenses, so you may be wondering what is the difference between critical illness insurance and disability insurance?

This chart will help highlight the differences between the two. 

AboutCritical Illness InsuranceDisability Insurance
Payout type and frequency?A tax-free, one-time payoutMonthly income replacement
When do you receive the payment?Upon diagnosis of a covered conditionIf you are unable to work due to an illness or injury
Is there a waiting period?No waiting period in most casesA waiting period generally applies
How long are you covered?Covered for lifeEnds at 65
What can you use them for?A large sum that you can use for what you want like paying medical expenses, mortgage and pay off debtMonthly expenses
Critical illness vs disability insurance

What is the difference between life insurance and critical illness insurance?

Much like critical illness insurance versus disability insurance, you may also be wondering what the differences between critical illness insurance and life insurance are. 

The biggest difference between the two coverages is that critical illness insurance will pay out while you are alive. It helps you get better and not have to worry about finances. On the other hand, life insurance will payout to your beneficiaries after you die. It helps to pay off outstanding debt, cover funeral expenses and leave your family with something. 

What is mortgage critical illness insurance?

If a covered critical illness occurs when Mortgage Critical Illness Insurance coverage is in place, one of your largest monthly expenses could be covered which would free up money to use for health-related expenses.

Canadian residents between 18 and 55 years of age are eligible to apply for Mortgage Critical Illness Insurance with the financial institution with which they have a mortgage. 

See our critical illness insurance guides:

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