Why having both Critical Illness Insurance and a Power of Attorney for Personal Care is important

Guestpost by Epilogue

Studies show Canadians are very uninsured. While 63% have insurance in some form, less than 10% are insured for unforeseen events (source: Insurance Business Magazine).

There are a couple of key ways you can cover yourself in the event something unimaginable happens:

• Critical illness insurance; and,
• A Power of Attorney for Personal Care (POA-PC)

Let’s break down what these things are and why they are both essential to have in place.

What is critical illness insurance?

Critical illness insurance is “an agreement with a life insurance company that they will pay you a tax-free lump sum if you develop a life-threatening illness or health event, or undergo treatment while under their coverage.”

Of course, life-threatening illnesses aren’t something anyone expects or anticipates. But, it’s a lot more common than you may think: 81% of working Canadians have suffered from or know someone who has suffered from a critical illness such as cancer, stroke, or heart attack.

When it comes to things like this, you don’t want to wait until something happens to think about putting protection in place. Because then it will be too late. Foresight is critical here.

What is a Power of Attorney for Personal Care?

A Power of Attorney for Personal Care (POA-PC) is a legal document that lets you name someone to make decisions about your health care and end-of-life care if you’re incapable of doing so yourself. It is also referred to as a Healthcare Directive, Representation Agreement, or Personal Directive, depending on your province.

Your “attorney for personal care” will make decisions related to your:

• Healthcare
• Nutrition
• Shelter
• Clothing
• Hygiene
• Safety

Your attorney for personal care might make important decisions like whether you should remain in your home or move to an assisted-care facility. They’ll also determine things like when you should see a doctor and your end-of-life care details.

These are all very sensitive and personal decisions, so whoever you name in your POA-PC should be someone you trust. You should also be sure to have conversations with this person while you’re healthy, so they know they’ve been appointed and understand your wishes.

Suppose you don’t make a POA-PC, and you become mentally incapable of making personal care decisions. In that case, the law in your Province appoints other substitute decision-makers (typically family members) to make some of these important decisions.

Why both critical illness insurance AND a Power of Attorney for Personal Care are important

There are two main differences between critical illness insurance and a POA-PC:

1. A POA-PC does not involve any sort of payout or exchange of money, whereas critical illness insurance does.
2. Critical illnesses can include illness that doesn’t lead to incapacity.  A POA-PC will only take effect if someone is mentally incapable of making health care decisions for themselves. So there are situations where critical illness insurance might take effect, but a POA-PC does not and vice versa.

Critical illness insurance is key because you’ll need money to cover the unexpected healthcare costs that arise in the event of an unforeseen illness.

A POA-PC becomes essential so you can control who makes the decisions regarding your health and how to handle any critical illness payout you receive (if your incapacity is due to the illness.)

For example, if someone suffers a heart attack and requires medical care, their critical illness insurance will kick in to assist financially. Having a heart attack doesn’t necessarily mean a POA-PC will need to take effect:

• If the person is still mentally capable of making their own decisions, the POA-PC will not come into effect.
• However, if the person slips into a coma at any point, their POA-PC will take effect and their attorney can legally make decisions regarding their healthcare.

If and when that person comes out of the coma and can make their own decisions again, their POA-PC is no longer needed, but critical illness insurance will still cover them.

Having both critical illness insurance and a POA-PC in place is vital to ensure you’re covered for a broader range of circumstances.

How to get critical illness insurance and a Power of Attorney for Personal Care

It’s never been easier for Canadians to put these vital protections in place.

When it comes to critical illness insurance, you can shop around to compare rates or ask your advisor to help you choose a critical insurance provider that’s right for you. Or, you can do it all online and let a digital advisor, like PolicyAdvisor, compare and contrast rates from the top insurance providers in Canada.

People often complete their Power of Attorney for Personal Care as part of an overall estate plan that includes a Will and a Power of Attorney for Property as well. You can work with a lawyer to complete your estate plan, including a POA-PC, which can be costly and time-consuming.

However, there are much more accessible and affordable online estate planning options available for Canadians today. Online estate planning solutions are ideal for people who don’t have a complicated situation. There are also dozens of resources to help you learn about how to make your will or POA online.

Final thought

The time to make decisions about your future is now, while you’re physically and mentally able to do so.

There is no benefit of hindsight when it comes to critical illnesses. Put safeguards in place now to ensure you’re covered should anything happen in the future.

When you cover yourself with both critical illness insurance and a Power of Attorney for Personal Care, you can rest easy knowing that the decisions made in regards to your health are yours, and you won’t be putting an undue financial burden on your loved ones.

This is a guest post from our friends at Epilogue, Canada’s first online Will platform founded by lawyers. Epilogue is a simple, fast, and affordable way for Canadians to complete a basic Will and Powers of Attorney online—without leaving the comfort of their own home.

PolicyAdvisor.com guestpost policy: From time to time we share posts and guides from our trusted partners in the Canadian technololgy and financial services indsutry. The views, thoughts, and opinions expressed in the post belong solely to the author, and not necessarily to PolicyAdvisor.com