The Complete Guide to Critical Illness Insurance in Canada

Authored by: Securian Canada

Securian Canada, a leading insurance provider of innovative, life-ready insurance solutions in Canada, has teamed up with the Canadian Automobile Association (CAA). Through this new collaboration, CAA introduces an innovative suite of insurance products and a digital-first customer experience to their more than seven million Members across the country. Beginning January 1st, 2024, CAA customers have access to a streamlined portfolio of life and health & dental insurance products, available at preferred prices for Members and delivered through a convenient and user-friendly digital platform. CAA Term Life, Health & Dental and Critical Illness products are underwritten by Canadian Premier Life Insurance Company (Securian Canada).

An unexpected medical emergency or severe health diagnosis can be stressful in more ways than one. The good news is that there is one simple way to take the financial stress out of the mix. How? By securing critical illness insurance in Canada.

In this article, we'll break down everything you need to know about critical illness insurance so you can decide if it's the right fit for you.

What is critical illness insurance?

Critical illness insurance is designed to provide you and your loved ones with financial support in the event you experience a severe health condition. If you're diagnosed with a covered critical illness, your insurance can provide you with a one-time lump-sum payout, subject to the terms of the policy, that can be used to cover anything that you and your family might need.

Unlike life insurance, which only provides a financial benefit if you pass away, critical illness provides financial support while you're still alive if you're diagnosed with a covered illness. This is why the payout is often referred to as a living benefit.

This financial support can help cover anything from medical expenses to lost income, so you can focus on the most important thing—recovering.

What illnesses are considered "critical illnesses"?

Critical illnesses typically refer to life-altering or severe conditions. They can often be longer-term illnesses and have serious impacts on the lives of those affected. Common critical illnesses that you might be familiar with include heart attacks, strokes, or cancer.

Critical illnesses are typically categorized into critical illness and early-stage critical illness. Early-stage critical illnesses are often diagnosed earlier and at a less severe stage. They're usually still included in critical illness insurance because they can have potential longer-term, life-threatening implications.

Examples of critical illnesses

Cancer

  • Cancer of specified severity

Heart Conditions

  • Aortic surgery
  • Cardiomyopathy
  • Coronary artery bypass surgery
  • Heart attack
  • Heart valve replacement or repair

Neurological Conditions

  • Acquired brain injury
  • Bacterial meningitis
  • Benign brain tumor
  • Coma
  • Dementia, including Alzheimer's Disease
  • Motor neuron disease (incl. ALS)
  • Parkinson's Disease and specified atypical Parkinsonian disorders
  • Paralysis
  • Stroke

Autoimmune Conditions

  • Aplastic anemia
  • Multiple sclerosis
  • Occupational HIV infection

Sensory and Mobility Conditions

  • Blindness
  • Deafness
  • Loss of limbs
  • Loss of speech
  • Loss of independent existence
  • Severe burns

Transplants and Organ-Related Conditions

  • Kidney failure
  • Major organ transplant
  • Major organ failure on waiting list

Examples of early-stage critical illnesses

Cardiovascular Conditions and Procedures

  • Aortic aneurysm
  • Coronary angioplasty
  • Endovascular aortic surgery
  • Implantation of a permanent cardiac pacemaker
  • Implantation of a permanent implantable cardioverter-defibrillator (ICD)

Early-Stage Blood Cancers

  • Chronic lymphocytic leukemia – stage 0

Early-Stage Breast Cancer

  • Ductal carcinoma in situ of the breast or lobular carcinoma in situ of the breast

Early-Stage Intestinal Cancer

  • Gastrointestinal stromal tumors (GIST)

Early-Stage Prostate Cancer

  • Prostate cancer – stage T1a or T1b

Early-Stage Skin Cancers

  • Dermatofibrosarcoma
  • Malignant melanoma – stage 1
  • Primary cutaneous lymphoma

Early-Stage Thyroid Cancer

  • Papillary thyroid cancer or follicular thyroid cancer – stage 1

Other Forms Of Cancer

  • Carcinoma in-situ (non-invasive cancer)
  • Neuroendocrine tumors (including carcinoid tumors)

Mastectomies

  • Carcinoma in-situ (CIS) of the breast treated with total mastectomy

Prostatectomies

  • Prostate cancer treated with radical prostatectomy

How does critical illness insurance work in Canada?

Here's a step-by-step breakdown of critical illness insurance in Canada.

1. Apply for and purchase a critical illness insurance policy

The first step with critical illness insurance is to find a policy that fits your needs. Before you start shopping around, you'll need to decide a few important things:

  • Policy length: This is how long you want to be covered for.
  • Coverage amount: This is how much you'll receive if you're diagnosed with a covered illness and meet the terms of your policy. A good rule of thumb is to cover at least six months of income.
  • Covered conditions: These are the critical illnesses that would be covered by your policy. You may also be required to answer questions about your medical history or complete a medical exam—although this isn't always the case.

2. Pay your premiums

Once you're approved for coverage and sign off on your policy, you'll pay what are known as premiums to your insurance company.

With critical illness insurance, your premiums will stay level throughout the entire term. This means you'll make the same monthly or yearly payments until your policy expires, which makes budgeting for critical illness insurance a breeze.

3. Submit a claim

If you're fortunate enough to never experience a critical illness during the term of your critical illness insurance policy, it will simply expire, and your coverage will come to an end. If you still want to be insured, you can renew or purchase new coverage depending on your needs.

On the other hand, if you're diagnosed with a covered condition during the term of your policy, you'll be able to file a claim. Once you provide the information needed to your insurance company, this will kick off the process of reviewing your claim and securing your living benefit.

4. Meet the policy requirements and survival period

When it comes to making a claim against your critical illness insurance policy, there will usually be some requirements and conditions you must meet before it can be approved. One common requirement you'll find is what's known as a survival period or waiting period.

The survival period or waiting period is how long you need to wait after being diagnosed with an illness before you can file a claim to receive your critical illness insurance payout.

Critical illness insurance policies can be very specific, and every policy is different.

5. Receive your living benefit

If your condition is covered and you meet the terms of your policy, you'll receive your tax-free lump-sum payout.

Despite being tied to a diagnosis, there aren't any restrictions for how you can use your living benefit—the choice is yours.

Keep in mind that critical illness insurance only provides a one-time payout. So, once you make a claim that's approved and you receive your living benefit, your coverage will come to an end.

What factors influence critical illness insurance premiums?

Critical illness insurance premiums will vary from person to person.

Age

Unfortunately, the older you are, the more likely you are to experience a severe health issue. As a result, critical illness insurance premiums tend to go up with age.

Gender

Men typically pay higher critical illness insurance rates compared to women, as they're statistically more likely to experience severe illnesses.

Health risks

Critical illness insurance is closely tied to your health and wellbeing. So, if medical questions or a medical exam point to you being a higher risk for a severe health issue, you may find yourself with higher premiums. For example, smokers tend to have much higher rates than non-smokers.

Term length

Longer critical illness insurance terms will have higher premiums than shorter policies since you're more likely to experience health issues over a longer period.

The slightly higher premiums might be worth it if you expect to need coverage well into the future. Because critical illness insurance tends to cost more as you age, you might end up paying even more come time for renewal.

Coverage amount

The smaller your payout, the lower your premiums will be.

Insurance provider

Each insurance company calculates its critical illness insurance premiums a little differently. So, you might see different rates from different companies, even for the exact same coverage.

It's also important to remember that the covered conditions can vary significantly from one insurance provider to the next. Insurance providers with less covered conditions often have lower rates but might leave you vulnerable to other severe health diagnoses.

Members can save 10% on critical illness insurance premiums with CAA Critical Illness Insurance, provided by Securian Canada. Learn more.

Who should consider critical illness insurance?

Most Canadians can benefit from having critical illness insurance.

There's a common misconception that all medical costs are covered by provincial healthcare. Government healthcare and employer-provided health insurance plans can go a long way in getting you the care you need. But with critical illnesses, there are often additional expenses that aren't covered.

Here are some reasons critical illness might be a good choice for you:

  • You have a partner or dependents who rely on your income.
  • You contribute to household responsibilities that would need to be covered if you were diagnosed with an illness, such as childcare.
  • You don't have health insurance beyond provincial coverage.
  • You have limited savings to cover unexpected expenses.

Is critical illness insurance worth it in Canada?

For most Canadians, critical illness insurance is worth it because it provides extra financial security during an already-stressful time.

See how you can put your mind at ease by securing comprehensive CAA Critical Illness Insurance from the comfort of your home. Discover CAA Critical Illness Insurance today.