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What does critical illness insurance cover?

by Sam Stilson
8 min read

What does critical illness insurance cover?

Getting critical illness insurance can bring you great peace of mind. Knowing you’ll have a financial safety net should you fall seriously ill can allow for economic flexibility in your future plans and safeguard you and your family against the unexpected.

But, what if you were to get sick and then discover that your condition wasn’t covered by your policy? Not only would you be emotionally devastated, but you’d be forced to up-end your finances during one of the direst points of your life.

That’s why it’s incredibly important to fully understand what conditions are covered by your critical illness insurance policy before purchasing. Not only should you know what’s covered, but you should familiarize yourself with the definitions of each ailment as stated by your insurer. By making sure that you’re covered for all the illnesses you’re most concerned about, and doing your homework on what constitutes a valid claim, you’ll avoid any shock or disappointment should tragedy strike.

But before we dive into the most commonly covered critical illnesses, if you’re not completely sure what critical illness insurance even is, we suggest reading our honest guide to critical illness insurance first.

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Commonly covered critical illnesses and conditions

In 2013, the Canadian Life and Health Insurance Association (CLHIA) updated their Critical Illness Benchmark Definitions in order to help standardize the language around common conditions and afflictions across the industry. They listed 26 common illnesses, conditions or health events in their publication, but that is not the maximum amount of conditions that can be covered, nor is that list exhaustive. Some insurers may offer coverage for illnesses not defined by the CLHIA and some may even use their own qualifying language.

However, these definitions are commonly used and adhered to by many insurers, so you should familiarize yourself with them before choosing a provider. There are some important distinctions in their descriptions. Whether it’s as broad as specifying coverage is only for bacterial meningitis and not viral, or as specific as the hourly length of time of a coma and its grade on the Glasgow coma scale, this language is ultimately used to determine the validity of your claim and therefore vital to understand.

Click here for the list of conditions and their definitions as per CLHIA. Please note that not all of these are included in every insurance policy unless explicitly stated. If you have an existing policy or intend to buy one, please refer to the policy documents for full terms and conditions and definitions.

What critical illness insurance is offered by Canada’s biggest insurers?

Critical illness insurance in its current form was introduced in Canada in the 1990s and is still a developing sector in the insurance industry today. Most of the major companies do offer some kind of policy though.

Some plans feature coverage for just one ailment, like cancer (and its many forms), whereas others cover the full 26 illnesses listed above, and sometimes even more.  The number of covered conditions varies somewhat from company to company. So if you’re looking to cover a specific illness, it’s worth exploring products from a variety of providers.

But to give you a general idea of what’s out there, let’s look at the critical illness products offered by two of Canada’s largest insurance companies.

Manulife
There are three packages offered by Manulife. They have a basic plan called CoverMe which offers instant approval and two more detailed plans called Lifecheque.

CoverMeLifecheque (Basic)Lifecheque
Illnesses covered:

Cancer
Heart attack
Stroke
Coronary artery bypass surgery
Aortic surgery

Illnesses covered:

Cancer
Heart attack
Stroke
Coronary artery bypass surgery
Aortic surgery

Illnesses covered:

24 illnesses/conditions

Term lengths:

To the age of 75

Term lengths:

To the age of 75

Term lengths:

10 and 20 year terms (renewable)
To the age of 65, 75 or 100

Coverage amount:

$25,000 to $75,000

Coverage amount:

$25,000 to $75,000

Coverage amount:

$25,000 to $2,000,000

 

Note: This table focuses solely on commonly offered adult plans, and does not include optional riders, benefits, age-specific conditions, partial payouts, or plan/provider specific clauses/features.

 

BMO Insurance

BMO offers a standard critical illness product called Living Benefit offered with varying term lengths. They also offer a slight twist on critical illness insurance through a product called Life Recovery Plus that offers monthly payouts after receiving a qualifying diagnosis. This differs from the standard lump-sum payment. They also have a policy designed specifically for women and cancers unique to them.

LifeRecovery Plus (Basic)LifeRecovery Plus (Enhanced)Living Benefit
Illnesses covered
Heart attack
Stroke
Cancer
Illnesses covered
Heart attack
Stroke
Cancer
Illnesses covered:
26 illnesses/ conditions
Term lengths:

To the age of 70

Term lengths:

To the age of 70

Term lengths:

10, 20-year renewable terms

To the age of 75
To the age of 100

Coverage amount:
$6,000 + $500/month up to one year
Up to $10,000 for hospitalization
$3,000 for surgery costs
Coverage amount:
$12,000 + $1,000/month up to one year
Up to $20,000 for hospitalization
$6,000 for surgery costs
Coverage amount:
$25,000 to $2,000,000

 

Note: This table focuses solely on commonly offered adult plans, and does not include optional riders, benefits, age-specific conditions, partial payouts, or plan/provider specific clauses/features.

Putting cost and additional features/benefits aside, a quick glance at the offerings from these providers shows that critical illness products are often offered in a similar fashion no matter the company, with the biggest differentiator being the number of illnesses covered.

Partial payouts and non-life-threatening illnesses

An interesting feature included in some policies is the partial payout option or as some companies may call it – an early discovery benefit. What this means is that you can receive a small amount of money if you contract a non-life threatening or less critical illness or condition while insured. In other words, if you develop treatable skin cancer, which to the average person is definitely cancer, you would not qualify for full payment of the policy benefit amount, as most policies do not consider it a ‘critical illness’. However, if you had a partial payout clause, you’d still receive some money as you did contract a form of cancer listed as eligible, and your policy would carry on through the length of your term.

These clauses typically pay out between 10 to 25 percent of your policy’s value (subject to a dollar value maximum) and most importantly it doesn’t void your policy or reduce your final payout if you do end up subsequently also contracting a defined life-threatening critical illness.

What illnesses qualify for partial payout?

These vary between provider and policy, but partial payouts often cover forms of non-life threatening cancer and coronary angioplasty. The number of covered conditions is typically small.

Selecting a level of coverage

With policies ranging from one illness to 26 or more you might be wondering how many illnesses you should get covered for?

If you want the best protection, you should obviously opt for a policy that covers the entirety of the CLHIA’s standard definitions. While it can be tempting to write off less common diseases as ‘unlikely to happen to you’, if you do contract one of them, you’ll undoubtedly regret the decision to leave them out of your coverage plan.

However, if premium cost is an issue, or you have a higher risk tolerance, there are some stats worth contemplating.

Most claimed critical illnesses

While these numbers may change with time, historically the vast majority of critical illness claims in Canada are for some form of cancer, to the tune of 60 per cent or more. Heart attack and stroke represent the second and third most likely claims, contributing another 20 per cent. It’s known in the industry that these ‘big three’ conditions are the most commonly developed and that’s why you’ll see them offered together in most basic policies.

Ultimately, only you can make the decision for what kind of protection you think you need, but due to the unexpected nature of illness, trying to figure out your ‘needs’ can leave you scratching your head. If you’re concerned, it’s best to err on the side of caution.

Try our free critical illness insurance calculator to figure out how much coverage you might require or speak to our friendly advisors.

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