Critical Illness Insurance policies pay out a lump sum tax-free benefit if you are diagnosed with an illness covered by the policy. Policies range from a minimum amount of $25,000 to a maximum of 2 million.
To demonstrate the value of these polices consider that 44% of Canadian men and 38.9% of Canadian women will develop Cancer during their lifetime. (*Source: Canadian Cancer Society 2007)
Most Critical Illness Insurance policies cover the following illnesses
ALS and other motor neuron diseases
Alzheimer’s disease
Benign brain tumour
Blindness
Cancer
Coma
Coronary artery bypass surgery
Deafness
Heart attack
Kidney failure
Loss of limbs
Major organ transplant
Multiple sclerosis
Occupational HIV
Paralysis
Parkinson’s disease
Severe burns
Stroke
Stomach Cancer Versus Breast Cancer
Scenario
John and Mary both purchase critical illness insurance policies with coverage of $500,000 respectively. Sadly, 18 years later Mary develops breast cancer and 30 days after her diagnosis she is eligible to make a claim. Subsequently Mary makes a claim and receives $500,000 as a tax-free lump sum payment. John continues making payments and at the end of 25 years John receives all of the premiums he has paid into his critical illness policy back. This amount totals $34,800.Think of it this way, if you had better than 1 in 3 odds of winning the lottery, and if you did not win after playing for 25 years and would receive back the entire cost of all the tickets you ever purchased back, would you play?