Critical Illness: The Living Benefit
Canadians are constantly reminded how important it is to have a good Life Insurance policy to provide for their families in the case of an unfortunate event. There is a similar employee benefit though, that is often overlooked and may be equally as important – and that benefit is Critical Illness Insurance.
The main difference between Critical Illness and Life Insurance is that Critical Illness Insurance is a living benefit. It is an insurance product in which the insurer is contracted to make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list. This payment provides financial support to an employee and their families and assist them with any adjustments they need to make in their lives to cope with the illness. Some of these adjustments may include additional medical care, transportation, living expenses, childcare costs, as well as money needed to compensate for a potential extended period of time away from work. There are no restrictions on how this money can be spent.
Some critical illnesses include:
- Heart Attacks
- Coronary artery bypass surgery
- Alzheimer’s Disease
- Multiple Sclerosis
- Parkinson’s Disease
- Lung Disease
- Kidney Failure
- Liver Failure
- Respiratory Failure
- Bacterial meningitis
- Benign brain tumour
- Loss of limb
- Loss of speech
The four bold illnesses are most commonly covered by a basic plan. The illnesses following may be added to enhanced plan types.
If an employee has Critical illness Insurance and contracts one of the predetermined illnesses, they will receive a tax-free lump sum payment equal to the maximum amount of coverage stated in their policy. Therefore, if their critical illness policy is worth $50,000, they will receive $50,000 when their claim is processed. Some insurance plans may look into the severity of the illness, but most pay the full sum regardless. Quite often the lump sum payment can only be claimed once, however, there is a chance a policyholder may receive a second payment if they are diagnosed with another unrelated critical illness.
It has become quite common for employers to double up on their benefits by purchasing both Life and Critical Illness Insurance. By doing so, it becomes more cost-effective than purchasing individually and gives your employees and their families a greater sense of peace of mind.
For more information on Critical Illness Insurance please watch the video below.