If you are diagnosed with an illness named within your critical illness insurance policy, you will receive funds as a lump sum in return. What you do with this money is up to you. Whether you would like to put these funds towards the most modern treatment available, the best available medications, or as a source of income while you are off from work, the choice is yours.
Utilizing Manulife’s disability and critical illness calculator, the importance of critical insurance can be highlighted by statistics. Between the ages of 30 and 40, your chances of getting a critical illness (CI) before turning 65 are as follows:
- 1 out of 5 women will get a CI before turning 65
- 1 out of 4 men will get a CI before turning 65
10 Ways to Save on Critical Illness Insurance
1. Compare insurance companies
With a large number of life insurance companies available, it is important to request quotes from several in order to compare premium rates. Working with an insurance broker may also help you when requesting quotes.
2. Mind the insurance type
A term critical illness policy will save you more money on your initial premium than a permanent plan, but the cost will increase as you get older.
3. Excluded pre-existing conditions
Some critical illness plans will exclude certain conditions, and by doing so, will save you money. For example, you may get a cheaper policy by excluding loss of sight. This way, you can take smaller risks and reap the rewards of lower premiums.
4. Backdating your policy
By backdating your policy, you may be able to lock into an earlier age and rate bracket, which will lower your premiums. You will need to pay some premiums starting from the new backdated date, but it will impact all future premiums and save you up to 10% in annual premiums.
5. Correct age rounding
When you are setting up your policy, ensure that your age is rounded down, not up. If your birthday is on December 31 and you will be turning 50, buy your policy within the first 6 months of the year. This way, your age will be rounded down to 49, rather than up to 50.
6. Consider the scope of illnesses covered
Each policy will cover a different set of critical illnesses, so it is important for you to choose what you would like covered. Consider your family history and be sure to cover those conditions that run within it. If your family has been affected by cancer, do not exclude it from your list.
7. Avoid guaranteed issue critical illness policies
These policies do not require a medical exam, but should only be considered by those with serious health issues. If you are in good health, you do not need a guaranteed issue policy. By completing a health exam, you will have lower insurance premiums.
8. Rid your policy of unnecessary benefits
If you are not interested in certain aspects of your critical illness policy, removing them from your policy will save you money thanks to lower premiums. For example, if you are uninterested in a waiver of premiums, a premium return upon death, or covering a child, remove these features from your policy.
- Smokers have higher insurance rates
If you have used any tobacco products within the past year, you will see a huge increase in your premiums. In many cases, premiums are more than double for a smoker, in comparison to a non-smoker.
10. Although difficult, diabetics can be insured
While most companies will not cover diabetics, there are some companies who offer insurance protection for those with diabetes. In these cases, it is beneficial to work with an insurance broker who has experience in this field.
10 Myths About Critical Illness (CI) Insurance
Myth #1: I cannot get coverage if I have a pre-existing condition
Critical illness insurance is actually available with traditional underwriting, as well as with no-medical underwriting.
Myth #2: My policy should cover all critical illnesses, even obscure ones
In reality, most people opt for the “Big 3”, which covers cancer, heart attack, and stroke. These illnesses account for over 70% of possible critical illness cases. If you have a family history with another condition outside of the Big 3, you can also add those conditions to your policy. The fewer illnesses you name, the lower your premium will be.
Myth #3: Disability insurance is the same as Critical Illness insurance
Disability insurance will provide you with income replacement for a limited time, which could be months or years, depending on the policy. Disability covers the loss of limbs, eyes, and hearing. In contrast, Critical illness insurance concerns the contraction of a deadly disease, such as one of the Big 3: cancer, heart attack, or stroke. Critical illness policies offer a one-time payment, intended to assist you with the costs involved in treatment, travel, or time off from work.
Myth #4: Coverage begins as soon as the policy is approved
Critical illness policies come with a waiting period, in order to prevent insurance fraud, which happens when insurance is purchased after an individual has contracted an illness. If you are already ill and do not have insurance, you might qualify for simplified issue insurance. In addition, everyone can qualify for guaranteed issue Critical illness insurance.
Myth #5: Premiums in Critical illness insurance policies increase over time
You have the option to purchase a level-premium insurance policy, in which your premium will never increase.
Myth #6: Provincial coverage will cover my critical illness needs
Coverage differs between provinces. Depending on the province in which you live, you may want treatments that are not covered by your government plan. The Globe and Mail reported cases where individuals paid for injections to prevent nausea during cancer treatment, costing them $1,800 of their own money.
Myth #7: My policy covers all critical illnesses
Every critical illness policy differs, as some only cover three ailments, while others may cover 20. An insurance broker can help you determine the best policy for your risk factors.
Myth #8: I am entitled to the full benefit listed on my policy
You might end up only receiving a partial benefit, depending on your situation. For cases in which you do not meet all of the conditions, you cannot receive the full benefit.
Myth #9: If diagnosed with a critical illness listed on my policy, I will automatically receive the benefit
All critical illnesses must meet their definitions, as listed in your policy. These often include stipulations concerning the duration or severity of the condition. The illness must also be properly diagnosed, in order for the benefit to be paid out.
Myth #10: Cancer coverage will cover all types of cancer
Cancer, among other critical illnesses, must meet the definition laid out in your policy. There are various types of cancer, and many definitions to protect against the risk.