Do I need disability insurance if I have critical illness insurance?


Critical illness insurance and disability insurance are often thought to be the same product and assumed to cover the same life events, but that’s not the case. Critical illness insurance pays you a tax-free lump sum in the event you develop a specific illness or undergo treatment during an agreed-upon coverage period. Disability insurance replaces a portion of your income in the event you become injured and you are unable to work. 


Disability-inducing injuries and critical illnesses are easy to mix up; they have much in common. Both can impact your ability to earn a paycheque but in considerably different ways. Because one can be so easily conflated with the other, people sometimes assume if they are covered for one (either disability or critical illness insurance), then they must be covered for both. 

Unfortunately, this is incorrect. While based on the same principles, disability insurance and critical illness insurance work in very different ways and provide benefits that are distinctly unique from one another. While the Canadian healthcare system is robust and acts as a significant safety net for the immediate treatment of our possible illnesses and injuries, we often need more than just medicine. If you are unable to work due to circumstances like those described above, you may want to take a closer look at the differences between the two.

What is critical illness insurance and what can it cover?

Critical illness insurance is an insurance policy that pays you a tax-free, lump sum if you develop a specified illness, health event or undergo treatment for those two situations during your agreed-upon coverage period. The coverage package can include any or all of the more than 26 critical illnesses or from cancer (and all its forms), aplastic anemia, blindness, kidney failure, heart attack, and more

Critical illness insurance acts similarly to life insurance in that you can use the benefit amount however you see fit, regardless of whether it’s directly related to your critical illness. That can include further treatment of your illness, rehabilitation and recovery costs, income replacement for the time you may need to take off, house cleaning, or even a giftbasket for your neighbours if they watered the plants while you were in the hospital – the choice is yours.

And, while not all critical illnesses have a high mortality rate, as a whole they are still quite common in Canada. This type of insurance gives you the financial independence to make decisions that are best for your recovery, family, or capitalizing on the time you have left.

To learn more about its finer details, read our full honest guide.

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What is disability insurance and what can it cover?

Disability insurance is meant to replace a substantial portion of your income should you become injured or ill and it affects your ability to work. It provides you with consistent monthly payments while you recover from your ailment or until your pre-determined coverage period ends – whichever comes earlier.

Like critical illness insurance, you can use the benefit on whatever you see fit, but the monthly payment structure is meant to mimic your paycheque, and typically intended to cover your mortgage or rent, and other living expenses while you are on the road to recovery.

There are several variables and types of disability insurance, which you can learn about here, but these are its main differentiating factors versus critical illness insurance.

How is disability insurance different from critical illness insurance?

Disability insurance and critical illness insurance are types of living benefit insurance; they allow an insured person to receive financial protection in the event of certain unique circumstances. The insurance benefit payment in the case of disability insurance and critical illness insurance, unlike life insurance, is received by the policy holder themselves rather than payments being made to dependents or family members – as is the case with life insurance. 

There are however some unique differences between the two which are highlighted below:

Disability Insurance Critical Illness Insurance
Claim event(s) Any illness or injury that leads to a loss of income Diagnosis of a pre-specified life-threatening illness or condition (severe disability may be included)
Covered Conditions Any condition that would prevent you from working, including:


  • Mental health struggles
  • Broken bones
  • Back injuries
  • Carpal tunnel
  • Seizures
  • Hearing or vision loss
  • and more
Covers 26+ common conditions including:



  • Heart attack
  • Cancer
  • Stroke
  • MS
  • Kidney failure
  • Parkinson’s disease
  • and more
Coverage amount Replaces a portion of your monthly income Not linked with your income, payment is determined by policy you select
Payment frequency Monthly benefit payments One or more lump-sum payment(s)
Coverage term Most policies lapse at age 65 Coverage can be obtained up to age 100
Return to work Benefits cease upon resuming work (although partial benefits may be available) Payout continues regardless of whether insured is working or not

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Do I need disability insurance if I have critical illness insurance?

The answer to this (and vice versa) is not so simple and depends on your needs and age among other factors. They are two distinct protection products addressing different situations. Both these protection products are important for Canadians that rely on their employment earnings to support their family, meet their ongoing expenses and pay off their mortgage or other liabilities. The policies complement each other quite well.

Where do I go for insurance advice?

You don’t have to go far. Our licensed advisors are happy to answer all your questions on the details of critical illness insurance versus disability insurance. We also have calculators for both critical illness insurance and disability insurance to give you a better idea of how much coverage you might need and how much it can cost. It’s better to plan ahead than to be caught unprepared and unprotected. Call 1-888-601-9980 now or set up your appointment with us right here.

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Call us at 1-888-601-9980 or book time with our licensed experts.

The information above is intended for informational purposes only and is based on PolicyAdvisor’s own views, which are subject to change without notice. This content is not intended and should not be construed to constitute financial or legal advice. PolicyAdvisor accepts no responsibility for the outcome of people choosing to act on the information contained on this website. PolicyAdvisor makes every effort to include updated, accurate information. The above content may not include all terms, conditions, limitations, exclusions, termination, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details. In case of any discrepancy, the language in the actual policy documents will prevail.  All rights reserved.

If something in this article needs to be corrected, updated, or removed, let us know. Email


  • Critical illness insurance and disability insurance are two distinct insurance products, while both are important and also compliment each other well
  • Where you need one over the other or both is determined by the policyholders specific needs
  • Critical illness insurance gives you a large lump sum of money which can be put towards large medical expenses that accompany a serious illness
  • Disability insurance provides a consistent payment for income replacement while you recover

By Carly Griffin
Senior Insurance Advisor, LLQP
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