How often have we been told of the importance of buying life insurance to protect loved ones should we die prematurely? To many that’s good advice. But now we are being told by insurance companies and financial advisors to buy insurance in case we keep living.
It’s called critical illness insurance (CII) and as you might have guessed, selling this relatively new plan is proving to be no less of a challenge than selling life insurance at the beginning of the century.
What exactly is critical illness insurance? It’s an insurance plan that can help CII policyholders who are diagnosed with any one of the covered serious illnesses. People who find out they have a critical illness will need money for a host of difficulties and necessities that might arise, such as special medical treatment, renovating their home for wheelchair access, help around their home, even paying down debt or taking a much-needed vacation.
There is a simple explanation. Consider it protection for the living, because you don’t need to die in order to collect the benefit.
Critical illness insurance
Here’s how CII works. You buy a policy worth, let’s say, $100,000. You pay a monthly premium, just like life insurance. Then tragedy strikes. After various humbling tests, doctors tell you that you’re suffering from one of several serious illnesses that are covered by critical illness insurance. You’ve paid your premiums and kept your policy in force, so you’re entitled to make a claim to receive the $100,000 cash benefit.
Most insurance companies offering CII have basic plans covering cancer, heart attack, stroke, and coronary artery bypass surgery. All CII policies should include those four core diseases and illnesses, which have the highest incidence rates.
More extensive plans offer additional coverage for: Alzheimer’s disease, Parkinson’s disease, kidney failure, major organ transplant, blindness, deafness, Multiple Sclerosis, ALS (amyotrophic lateral sclerosis, also called Lou Gehrig’s disease) or other motor neuron diseases, occupational HIV (human immunodeficiency virus), coma, benign brain tumour, paralysis, loss of limbs, and severe burns.
Sobering statistics
The grim reality is that critical illness is more common than you may think:
- The average age of people who make claims on their critical illness insurance policies is 49 (Munich Reinsurance Company, 2005).
- 44% of men and 39 % of women will develop some form of cancer in their lifetimes (Canadian Cancer Society, 2002).
A product with a purpose
A good example of where CII may become increasingly important is in the area of heart attacks. Eighty per cent of heart attack patients survive when they’re admitted to hospital, but only 45 will be able to return to work (Heart and Stroke Foundation, 2007). If a person suffers a heart attack, it’s potentially devastating not only to the person, but also to that person’s family because of its serious impact on income and savings. Simply put, their finances will be stretched if they can’t return to work.
Could it happen to you? People are more likely to have a critical illness by age 75 than they are to suffer a premature death. The focus should be on recovery, not worrying about your financial situation.
One way to ease that worry is to invest in insurance created for that specific purpose. With CII, you can alleviate some of the financial concerns and concentrate on getting better.
The first step you should take if you’re interested in finding out more about CII is talking to an insurance advisor. Your advisor can explain the covered conditions and illnesses, and tell you how the plan works and how much your premium will be.
The plan is motivated by a desire to help people. Everybody has stories about close family, friends, or associates who could have used the benefit this insurance provides.
This plan addresses an obvious need. Critical illness insurance makes good common sense. It’s insurance for the living. Contact me today for your non-obligatory quote!
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