A severe illness can hurt both your finances and your health. Find out what you can do to protect yourself and your family.
Even if you take good care of your health, your doctor might call you with some bad news one day. Although the universal health care system available to Canadians can help you in many cases, not all costs associated with a critical illness are covered by your government plan.
A critical illness can have both financial and physical repercussions. The 2016 Sun Life Canadian Wellbeing Index revealed that 50% of respondents had experienced a severe disease, and 42% have experienced financial hardship as a result. However, there is a solution: health insurance like critical illness insurance can help you cover those unexpected costs while staying on track to meet your financial goals.
The 2013 Sun Life Canadian Wellbeing Index found that 78% of Canadians had either not saved up for a health issue or were not prepared at all. Additionally, 38% of respondents indicated that they do not have private health care insurance or savings to spend on health care expenses.
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A severe illness can occur without warning, exposing you to an increase in your expenses and your level of stress. Such a situation may be temporary, but it may affect your long-term needs. Although the Canada Health Act promotes access to hospital care and doctor visits, additional costs (e.g. for prescription drugs, depending on the coverage provided by your provincial plan) may accrue over time. You may also incur travel costs to get to the hospital for treatment.
Suppose you have a health insurance plan offered by your employer. In that case, a second insurance plan generally covers the costs of specific treatments, services and drugs, sometimes up to an annual or lifetime maximum. Critical illness insurance takes a comprehensive approach to help you cover the costs associated with an illness that affects your lifestyle. If you suffer from a condition covered by your insurance and survive this illness during the waiting period stipulated in the contract, you will receive a lump sum cash benefit which you can use as you see fit.
Critical illness insurance can also be a source of income if your cash flow is running low. If, for example, you have to miss work due to a covered illness, your short-term or long-term disability insurance will only replace part of your income. Once the waiting period is over, critical illness insurance will allow you to obtain a lump sum to compensate for your loss of income.
In addition, this amount can help you cover the cost of medication, travel, supplies and equipment, and other expenses you pay (not covered by a standard benefit plan). For example, 2 out of 5 Canadians will be diagnosed with cancer during their lifetime, and, thanks to advances in the medical field, 60% of them will survive for 5 years or more. However, the costs associated with treatment are not always covered by your provincial plan or the plan offered by your employer. Critical illness insurance also provides coverage in the event of a heart attack. The survival rate following such an incident is on the rise.
This critical illness insurance calculator can help you assess the potential impact of such an illness on your financial situation.
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The best time to determine how to protect yourself and your family against the financial risks associated with a critical illness are when you are in good health. Your advisor can help you find insurance that will meet your needs.
