Get the Best Critical Illness Insurance in Canada for 2023
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A diagnosis of a critical illness can turn your world upside down. In the event of a big health emergency, such as cancer, heart attack or stroke, critical illness insurance can provide a crucial financial lifeline.
Did you know that standard public and private health insurance plans in Canada do not cover the entire costs of many life-threatening illnesses? The cost of specialized treatment can be very, very expensive.
This guide explores critical illness insurance, how it works, what it covers and whether it could be the right choice for you and your family.
What is critical illness insurance in Canada?
Many Canadians, especially the young and healthy, can't imagine being diagnosed with cancer or experiencing a heart attack or stroke. But sadly it isn't that infrequent.
Critical illness insurance provides additional coverage for medical emergencies including 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 a medical emergency like:
- Heart attack
- Stroke
- Cancer
- Coronary bypass
While Canadian healthcare covers many costs, expensive prescriptions, private specialists and tests are often not included.
Critical illness insurance payouts can be used on non-medical expenses related to the illness, including transportation and family support.
Watch out!
Sadly, critical illnesses are 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.
What is a critical illness?
A critical illness typically refers to a life-threatening or terminal illness. The most common are cancer, heart disease and stroke. In high-income countries like Canada, these are consistently among the biggest killers.
Other illnesses considered critical by insurance companies include major organ failure, ALS, Multiple Sclerosis, severe burns and more.
Good to know
What medical professionals and insurance policies consider to be a critical illness is not always the same thing. If you are concerned about a specific illness, it is worth familiarizing yourself with your prospective critical illness insurance policy before buying.
How does critical illness insurance work?
A critical illness can be very expensive. This is where critical illness insurance comes in. Acute illness could require extensive care, specific medicine or lifestyle changes. A good policy can help you bridge the financial gap between your savings, your existing health care and the sum needed for your care. Should you qualify, the policy will provide a large, tax-free payout to cover care, transportation and current expenses like your bills and mortgage.
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. Besides a payout, critical illness policies may provide other valuable help. They may cover access to leading medical experts and counselling services to help you deal with your diagnosis.
It can also help cover daily living expenses such as your mortgage, childcare 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 does critical illness insurance cover?
The list of covered critical illnesses that are eligible for critical illness insurance coverage ultimately varies from provider to provider, but some of the most common illnesses that would trigger a payout are:
- Heart attack
- Stroke
- Life-threatening cancer
- Coronary bypass
- Renal failure
- Paralysis
- Loss of a limb
A major advantage of critical illness insurance vs disability insurance is that the money can be used towards a wide variety of expenses. These may include:
- Expensive medical services, treatments or specialists not covered by another policy.
- Counselling services
- Installing lifts and ramps at home
- Transportation expenses and retrofitting vehicles to make them accessible
- Daily living expenses with recovering from an illness.
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?
For many people, the answer is a clear yes.
Critical illness insurance provides a financial lifeline 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 concentrate on recovery rather than finances after a serious diagnosis. 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.
For example
Let's look at an example: Betty is a theatre set designer living and working in Ontario. She's in her early 50s. One day at work she suffers a stroke. Recovery is long and difficult. Fortunately, she had a critical illness insurance policy for $250,000. The benefit comfortably covers her sessions with a team of world-class speech and physical therapists. It also allows her and her family to continue paying the mortgage and everyday bills while she recovers, but is unable to work. 18 months later, fully recovered and financially whole, she makes her triumphant return to the Toronto theatre scene.
Want to read more? Take a deep dive into whether critical illness insurance is worth it.
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.
Our critical illness insurance calculator can help you to estimate costs and find the right policy for you.
Using that rule, if your monthly take-home 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 or credit card debt?
- 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.
Watch out!
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.
What are the big 4 critical illnesses?
Some policies like Ivari critical illness insurance and Desjardins critical illness insurance allow you to purchase a less-expensive plan limited to 4-conditional coverage. These cover:
- Life-threatening cancers
- Heart attacks
- Coronary artery bypass surgery
- Strokes
These conditions account for an overwhelming majority of claims. Insurance companies offer basic policies that can save you money while offering significant protection against critical illness.
Good to know
Every insurer is different. For example, Blue Cross Critical Illness policies offer a basic 3 illness list covering stroke, heart attack or cancer.
What qualifies as a critical illness?
Unfortunately, there is no hard and fast rule for what qualifies as a critical illness. Many providers offer a basic policy to cover 3 or 4 conditions and an enhanced policy covering 25 or more conditions.
Check your insurer or prospective policy carefully. The severity required to qualify for a critical illness and exact definitions and lists of illnesses is out of the scope of this article as they vary too greatly between insurers.
With that said, here is a list of critical illnesses that may appear on your company’s policy:
- Acquired brain injury due to external trauma
- Active hepatitis, AIDS or AIDS-related disease
- Alzheimer's Disease
- Aortic surgery
- Aplastic anemia
- Autism
- Bacterial meningitis
- Benign brain tumour
- Blindness
- Cancer (life-threatening)
- Coma
- Coronary angioplasty
- Coronary artery bypass surgery
- Coronary surgery (coronary artery bypass)
- Cystic fibrosis
- Deafness
- Dementia
- Diabetes
- Dilated cardiomyopathy
- Fulminant viral hepatitis
- HIV infection
- Huntington's chorea
- Kidney failure
- Liver failure
- Loss of independence
- Loss of Limbs
- Loss of Speech
- Lou Gehrig's disease - amyotrophic lateral sclerosis (ALS)
- Major organ transplant
- Motor neuron disease
- Multiple sclerosis
- Muscular dystrophy
- Occupational HIV infection
- Paralysis
- Parkinson’s disease
- Permanent paralysis (paraplegia, quadriplegia)
- Primary pulmonary
- Progressive systemic
- Pulmonary fibrosis
- Severe burns
- Stroke (cerebrovascular accident)
- Transient ischemic attack
Good to know
As of the time of publication, our team is unaware of any policy that covers each and every one of these conditions, but each one appears at least once on a major critical illness insurance policy.
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.
- Premiums are typically affordable
- 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 by your insurance provider. Even if your illness is listed, whether it is covered will depend on its severity.
- Coverage and prices vary. Besides differences from provider to provider, your health, age, smoking status and lifestyle can significantly impact the affordability of critical illness insurance.
- Coverage may end after the policyholder reaches a specific age.
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:
| Age | Price per month |
|---|---|
| Under 25 | $7 |
| 51 to 55 | $27 |
| 56 to 60 | $44 |
| 61 to 65 | $56 |
What is the best critical illness insurance in Canada?
Which critical illness insurance provider and policy is best for you depends on your situation, your risk tolerance, your age, health and your ability to pay.
Here are some commonly searched critical illness insurance providers in Canada:
- Beneva (merger of La Capitale and SQQ)
- Blue Cross critical illness insurance
- BMO critical illness insurance
- Canada Life critical illness insurance
- CIBC critical illness insurance
- The Co-operators critical illness insurance
- Desjardins critical illness insurance
- IA critical illness insurance
- La Capitale critical illness insurance
- Manulife critical illness insurance
- OMA critical illness insurance
- RBC critical illness insurance
- Scotiabank critical illness insurance
- SQQ critical illness insurance
- Sun Life critical illness insurance
- TD critical illness insurance
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.
| About | Critical Illness Insurance | Disability Insurance |
|---|---|---|
| Payout type and frequency? | A tax-free, one-time payout | Monthly income replacement |
| When do you receive the payment? | Upon diagnosis of a covered condition | If you are unable to work due to an illness or injury |
| Is there a waiting period? | No waiting period in most cases | A waiting period generally applies |
| How long are you covered? | May purchase coverage for life | Ends 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 debt | Monthly expenses |
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 pay out to your beneficiaries after you die. It helps to pay off outstanding debt, cover funeral expenses and leave your family with something.
What are return of premium benefits for critical illness insurance?
You can add on a return of premium rider on some critical illness insurance policies. 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.
This policy option is rare in Canada but is notably available with Sun Life's critical illness insurance.
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:
- Scotialife Critical Illness Insurance Review (2023)
- Sun Life Critical Illness Insurance Review (2023)
- TD Critical Illness Insurance Review (2023)
- RBC Critical Illness Insurance Review (2023)
- OMA Critical Illness Insurance Review (2023)
- Manulife Critical Illness Insurance Review (2023)
- iA Critical Illness Insurance Review (2023)
- Desjardins Critical Illness Insurance Review (2023)
- CIBC Critical Illness Insurance Review (2023)
- Canada Life Critical Illness Insurance Review (2023)
- BMO Critical Illness Insurance Review (2023)
- Blue Cross Critical Illness Insurance Review (2023)
- Is Critical Illness Insurance Worth It?
- What qualifies as a critical illness?
- Critical Illness Calculator: How Much Will You Need?
- Get a quote critical illness insurance
